Oil falls on rising US inventories, fears of COVID-19 in China

Oil prices fell on Wednesday after data showed that US crude stocks rose more than expected amid fears that demand for fuel will be dented by the increase in Covid-19 cases in China, the world’s largest importer of crude.

Brent crude futures fell 44 cents, or 0.5 percent, to $94.92 a barrel by 0454 GMT, while US West Texas Intermediate crude futures fell 53 cents, or 0.6 percent, to $88.38 a barrel.

Both benchmarks fell about 3 percent on Tuesday.

US crude oil inventories rose by about 5.6 million barrels for the week ending November 4, according to market sources citing figures from the American Petroleum Institute, while seven analysts polled by Reuters estimated that crude stocks will rise by an average of 1.4 million barrels.

COVID-19 cases surged in Guangzhou and other Chinese cities, as the global manufacturing hub became the country’s latest COVID epicenter.

On the other hand, supply concerns remain with the imminent imposition of a European Union embargo on Russian crude and the reduction of production by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, in the OPEC+ grouping.

The European Union is due to ban imports of Russian crude by Dec. 5 and Russian oil products by Feb. 5, in response to Russia’s invasion of Ukraine.