Oil Down on US crude oil supply build

Oil was down on Thursday morning in Asia, with investors digesting a small but surprising build in US crude oil supplies that re-ignited fuel demand worries.

Brent oil futures were down 0.37% to $55.87 by 10:02 PM ET (3:02 AM GMT) and WTI futures fell 0.34% to $53.13. The black liquid gave up some of the gains made during the past two days on hopes of massive Covid-19 stimulus measures under newly inaugurated US President Joe Biden, but both Brent and WTI futures continued to stay firmly above the $50 mark.

US crude oil supply data from the American Petroleum Institute showed a build of 2.562 million barrels for the week ending Jan. 15. This was against the 300,000-barrel draw in forecasts prepared by Investing.com, and the 5.821-million-barrel draw recorded during the previous week.

“Oil prices look a tad vulnerable to potential profit-taking after US crude stockpiles bearishly rose 2.56 million against consensus draw,” Axi chief market strategist Stephen Innes warned in a note.

However, the same data also showed a-smaller-than expected build in gasoline stocks and distillate inventories inclusive of diesel, distillate and jet fuel.

Crude oil supply data from the US Energy Information Administration is due on Friday.

Covid-19 restrictions on mobility were hurting the near-term outlook for oil demand, although investors had been looking beyond that on the hopes that vaccine rollouts would ease lockdowns, Axi’s Innes said.

“Simultaneously, the near-term China crude demand forecast looks high and susceptible to revision lower as lockdowns spread in the country ahead of the Lunar New Year,” the note added.

Meanwhile, Biden got straight to work after being inaugurated as the 46th US president, and one of his first actions was to revoke a permit for the Keystone XL oil pipeline project from Canada, as well as announcing America’s return to the Paris climate accord.

Biden’s administration will also commit to ending new oil and gas leasing on federal lands, Biden press secretary Jen Psaki said, although a timeline for achieving that goal has yet to be laid out.

First published on Investing.com