NEW YORK – Oil prices edged higher on Wednesday, rebounding from early losses after U.S. crude stockpiles unexpectedly fell and inventories at the nation’s largest storage site hit their lowest level in three years.
Source: Reuters
Brent crude futures rose 26 cents, or 0.3%, to $85.35 a barrel as of 10:48 a.m. EDT (1448 GMT), lingering close to multi-year highs.
November U.S. West Texas Intermediate (WTI) crude, which expires on Wednesday, rose 59 cents, or 0.7% to $83.55 a barrel, while the more active WTI contract for December was up 41 cents, or 0.5%, to $82.85 a barrel.
The market had softened overnight after the Chinese government stepped up efforts to tame record high coal prices and ensure coal mines operate at full capacity as Beijing moved to ease a power shortage. Oil prices have in part been swept up in surging natural gas and coal prices worldwide in anticipation that power generators may switch to oil to provide electricity.
Oil has also been rising, however, as supply tightens, with OPEC choosing to remain on the sidelines rather than add barrels to the market, and as U.S. demand has ramped up.
U.S. crude stocks fell by 431,000 barrels in the most recent week, the U.S. Energy Information Administration said, against expectations for an increase, and gasoline stocks plunged by more than 5 million barrels as refiners cut processing due to maintenance. [EIA/S]
U.S. stocks at the Cushing, Oklahoma delivery hub hit their lowest level since October 2018. Gasoline stocks are now at their lowest since November 2019, the EIA said.
Crude markets in general remain supported on the back of a global coal and gas crunch, which has driven a switch to diesel and fuel oil for power generation.
Saudi Arabia’s minister of energy said users switching from gas to oil could account for demand of 500,000-600,000 barrels per day, depending on winter weather and prices of other sources of energy.
Prices for Chinese coal and other commodities slumped in early trade, which in turn pulled oil down from an uptick earlier in the day.
China’s National Development and Reform Commission said on Tuesday it would bring coal prices back to a reasonable range and crack down on any irregularities that disturb market order or malicious speculation on thermal coal futures.
