Oil prices rose by more than $2 as US crude inventories fell

  • US crude inventories decreased by 5.9 million barrels, compared to the estimated 1.7 million barrels
  • No new COVID-19 deaths in China boosts hopes of easing restrictions
  • A minister in Saudi Arabia supports the OPEC + move to reduce oil production
  • Snowfall to travel in the United States

HOUSTON (Reuters) – Oil prices rose more than $2 a barrel on Wednesday after data showed larger-than-expected drawdowns in US crude inventories, but the gains were capped by a blizzard expected to hit travel in the United States.

Brent crude futures for February delivery rose $2.21, or 2.76%, to $82.20 a barrel, while US West Texas Intermediate crude futures rose $2.06, or 2.7%, to $78.29.

US crude inventories fell by 5.89 million barrels, according to data from the US Energy Information Administration (EIA), compared to an estimate for a decline of 1.66 million barrels. Market sources said that data from the American Petroleum Institute showed on Tuesday a decline of 3.1 million barrels in the week ending December 16.

“This report is very optimistic, especially with the fact that there are drawdowns from the crude oil formula and distillate inventories stopped the building chain before the cold blast,” said Phil Flynn, analyst at Price Futures Group.

Distillate inventories fell by 242,000 barrels, according to EIA data, compared to analyst estimates for a build of 336,000 barrels.

Markets have also been awaiting clarification on when the Keystone pipeline, a major artery carrying Canadian crude to the United States, will resume after TC Energy (TRP.TO) said it removed the ruptured section of pipeline that caused an oil spill earlier in the year. This month. Submit it for mineral testing as directed by US regulators.

Prices were also boosted by hopes that China will ease some COVID-19 restrictions after no new COVID-19 deaths were reported.

China’s imports of crude oil from Russia in November rose 17 percent year-on-year as Chinese refiners scrambled to secure more shipments ahead of price caps imposed by the Group of Seven and the European Union from Dec. 5.

Meanwhile, Saudi Arabia’s energy minister said on Tuesday that the heavily criticized move by OPEC+ to cut oil production turned out to be the right decision. CMC Markets analyst Tina Teng said the comments suggested that OPEC+ may continue to keep supply tight.

With the prospect of diminishing oil demand, large parts of the United States are expected to experience heavy snow that will likely cause flight delays and impassable roads during one of the busiest travel times of the year.

Overall, Russia’s oil exports fell by 11% on a monthly basis from December 1 to 20 after the European Union’s embargo on Russian oil came into force, Kommersant daily reported.

(Reporting by Shadia Nasrallah, Dmitry Zhdannikov, and Rowena Edwards). Additional reporting by Isabelle Kua in Singapore. Editing: Kirsten Donovan, Andrea Ricci, David Evans, and Alex Richardson

Our Standards: The Thomson Reuters Trust Principles.

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