Oil Futures Higher, Brent Firmer After US Inventories Data

Brent crude futures edged higher to USD 74.2 per barrel on Wednesday, after rebounding more than 3% in the previous session, as shrinking inventories and an energy crunch in Europe more than offset worries about new restrictions to combat the Omicron spread that could dent fuel demand.

Government data showed domestic oil stockpiles shrank for the fourth week in a row by 4.715 million barrels last week, well above market expectations of a 2.75 million draw and in line industry estimates pointing to a 3.67-million-barrel decrease.

Natural gas prices surged in Europe after Russia curbed flows, forcing some countries to boost electricity imports and burn oil to meet demand. Elsewhere, analysts expect continued volatility as oil prices remain vulnerable to omicron-related headlines, exacerbated by lower trading volume towards the year-end.

WTI crude futures steadied above USD 71.5 per barrel on Wednesday, following a 3.7% rebound in the previous session underpinned by a larger-than-expected draw in US crude inventories and an energy crunch in Europe, while concerns about new restrictions to curb infections by the omicron variant capped gains.

Natural gas prices surged in Europe after Russia curbed flows, forcing some countries to boost electricity imports and burn oil to meet demand.

Elsewhere, analysts expect continued volatility as oil prices remain vulnerable to omicron-related headlines, exacerbated by lower trading volume towards the year-end.