Oil prices steadies as inventory fall tempers demand woes

Oil prices were broadly steady on Wednesday as rising global COVID-19 cases took the shine off an earlier rally spurred by a bigger-than-expected drop in U.S. crude inventories.

Brent crude prices were up 11 cents, or 0.2%, at $56.69 a barrel by 1311 GMT. Prices rose as far as $57.42 a barrel earlier in the session, the highest since February 24.

The next milestone for Brent prices is a rise above $60, a level not seen since late January 2020.

U.S. West Texas Intermediate (WTI) was up 22 cents, or 0.4%, at $53.43, after hitting a session high of $53.93, its highest since February 20.

“The optimistic mood among investors, coupled with positive signs on the supply and demand sides, is lending support,” Commerzbank said.

Crude stocks in the U.S. dropped by 5.8 million barrels last week to around 484.5 million barrels, data from the American Petroleum Institute showed late on Tuesday.

That was far more than analysts’ expectations in a Reuters poll for a fall of 2.3 million barrels.

Official Energy Information Administration inventory data is expected later on Wednesday.

Saudi Arabia cut supplies of crude for February loading for at least three Asian buyers while meeting requirements of at least four others, several refinery and trade sources told Reuters on Wednesday.

But rising COVID-19 death tolls in Europe and the United States and fresh virus containment measures elsewhere weighed on prices.

China recorded the biggest daily jump in COVID cases in more than five months, despite four cities in lockdown, increased testing and other measures aimed at preventing another wave of infections in the world’s second biggest economy.