Oil prices gain despite rising inventories, China demand concern

Oil prices gained on Wednesday in Asia even after the American Petroleum Institute (API) said US oil inventories increased last week.

US Crude Oil WTI Futures gained 1.0% to $50.12 by 11:50 PM ET (03:50 GMT). International Brent Oil Futures also rose 1.2% to $54.59.

Oil prices began their rallies yesterday after reports said the <a href=’https://staging.theenergyyear.com/companies-institutions/opec/’>OPEC+ representatives meeting in Vienna discussed additional cuts of up to 1.0 million barrels per day to cope with lost demand from China’s coronavirus crisis.

Despite the gains this week, oil are still down more than 20% since early January as the coronavirus dented global demand.

ING Bank said the market is “clearly worried” that Chinese refinery demand will retreat.

“The issue for the market is if travel restrictions continue for an extended period … demand loss will become increasingly difficult for the market to swallow,” ING said.

Last week, a Chinese government economist said that the country’s first-quarter economic growth may drop to 5% or even lower due to the virus outbreak, Reuters reported, citing a local magazine.

The API said in its weekly report that crude stockpiles rose by 4.2 million barrels for the week ended Jan. 31, compared with a draw of about 4.3 million barrels reported for the week before.

The Energy Information Administration is expected to report a build of about 2.8 million barrels when it issues official numbers tomorrow, according to analysts’ forecasts compiled by Investing.com.