Oil prices stabilize after falling US stockpiles overshadow Covid fears in China

Oil prices were little changed on Wednesday, as concerns about rising COVID-19 cases in China, the world’s largest oil importer, were offset by a larger-than-expected draw in US crude inventories.

Brent crude futures rose seven cents, or 0.1 percent, to $80.06 a barrel by 0404 GMT, while US West Texas Intermediate crude rose four cents, or 0.1 percent, to $76.27.

Market sources said, quoting data from the American Petroleum Institute, that crude stocks fell by about 3.1 million barrels in the week ending December 16, while nine analysts polled by Reuters estimated a decline of 1.7 million barrels in stocks.

Gasoline stocks increased by about 4.5 million barrels, while distillate stocks increased by 828 thousand barrels, according to the sources, who asked not to be identified.

Saudi Energy Minister Prince Abdulaziz bin Salman said in an interview with the official Saudi Press Agency that OPEC + members keep politics away from the decision-making process and from their assessments and expectations.

He added that the OPEC+ decision to cut production, which was heavily criticized, turned out to be the right decision to support market and industry stability.

Teng said that oil prices received support from these comments, which indicated that OPEC + may continue to maintain tight supply to support prices.

However, growing concerns about an increase in COVID-19 infections in China, as the country begins to ease its strict “zero Covid” policy, has kept oil prices from rising.

The Chinese approach kept the number of infections and deaths relatively low among 1.4 billion people, but the World Health Organization described it this year as “unsustainable” due to concerns about its impact on the lives of citizens and the country’s economy.

China’s imports of crude oil from Russia rose 17 percent in November compared to a year earlier, as Chinese refineries (TADAWUL:2030) scrambled to secure more shipments ahead of the price cap imposed by the Group of Seven countries on December 5.

This increase made Russia the largest supplier of oil to China, ahead of Saudi Arabia.