MELBOURNE (Reuters) – Oil prices fell on Thursday after data showed U.S. crude inventories unexpectedly surged last week, rekindling concerns over pandemic restrictions that are reducing demand for fuel.
U.S. West Texas Intermediate (WTI) crude futures fell 27 cents, or 0.5%, to $ 53.04 a barrel at 0147 GMT, after two days of gains on hopes of massive spending by relief for COVID-19 under new US President Joe Biden.
Brent futures also fell 26 cents, or 0.5%, to $ 55.82 a barrel.
U.S. crude oil inventories rose 2.6 million barrels in the week ending Jan. 15, according to data from the American Petroleum Institute, an industry group, compared to analyst forecasts from a Reuters poll for a drop of 1.2 million barrels. [API/S]
“Oil prices appear a bit vulnerable to potential profit taking after US crude inventories were down 2.56 million from consensus,” said Stephen Innes, chief market strategist at Axi, in a note to customers.
However, gasoline and distillate inventories, which include diesel, distillate and jet fuel, increased less than analysts had expected.
The US Energy Information Administration is due to release its weekly inventory report on Friday.
Axi’s Innes said COVID restrictions on mobility were hurting the near-term outlook for oil demand, although traders looked beyond that in hopes the vaccine rollout would ease lockdowns.
“At the same time, the near-term forecast for crude oil demand in China looks high and likely to be revised downwards as lockdowns spread across the country ahead of the Lunar New Year,” he said.
The Biden administration has pledged to reduce carbon emissions and among his first actions as president, Biden announced America’s return to the Paris climate agreement and revoked a permit for the project Canada’s Keystone XL Pipeline.
The administration has also pledged to end new oil and gas leases on federal lands, Biden’s press secretary said, although Biden has not set a timeline for achieving that goal.
Reporting by Sonali Paul; Edited by Shri Navaratnam