Oil rises as investors take risks and increase China’s demand

Oil prices rose on Wednesday, recouping losses incurred in the previous session, as investors turned to riskier assets such as commodities amid gains in stock markets and signs of renewed demand in China, the largest oil importer.

By 0455 GMT, Brent crude futures for December settlement rose 46 cents, or 0.5 percent, to $90.49 a barrel.

US West Texas Intermediate crude for November delivery recorded $83.69 a barrel, an increase of 87 cents, or 1.1 percent.

In the previous session, Brent crude fell 1.7% and US crude fell 3.1% to its lowest level in two weeks, due to reports that US President Joe Biden intends to withdraw more barrels from the Strategic Petroleum Reserve.

Risk appetite supported oil prices, which rebounded thanks to encouraging US corporate earnings and rising stock markets.

Prices were also supported in light of signs of recovery in Chinese demand. Private refining giant Zhejiang Petrochemical Corp. took an additional quota for importing crude oil in 2022 of ten million tons, and the state-run ChemChina took an additional quota of 4.28 million tons. That equates to about 104 million barrels.

The expected ban from the European Union on crude and Russian oil products and the production cut decided by the OPEC + group, consisting of the Organization of Petroleum Exporting Countries (OPEC) and other producers, including Russia, amounting to two million barrels per day, has kept prices strong.

An OPEC+ cut and an EU embargo will pressure supplies in an already tight market. European Union sanctions on Russian oil will appear in December and February.

To fill the gap, Biden will announce a plan later on Wednesday to sell the remaining SPR inventory and reveal details of a strategy to refill the stockpile when prices fall, a senior administration official said.

A senior official said the administration plans to sell 15 million barrels of its reserves in December, the last batch of 180 million barrels withdrawn this year.

Market sources, citing figures from the American Petroleum Institute, said on Tuesday that crude stocks in the United States fell by about 1.3 million barrels in the week ending October 14. Gasoline stocks fell by 2.2 million barrels, while distillate stocks fell by 1.1 million barrels.

Inventory data from the Energy Information Administration, the statistical arm of the US Department of Energy, is due later Wednesday.