Oil edges up after less-than-expected US inventories rise

BENGALURU: Oil prices were up slightly in light volumes on Wednesday after government data showed a smaller-than-anticipated build in US crude inventories, countering weak economic data from Tuesday.

Brent crude was up 9 cents, or 0.1%, to $86.22 a barrel by 11:16 a.m. EST (1616 GMT) after declining 2.3% in the previous session. US West Texas Intermediate crude futures were up 39 cents, or 0.5%, to $80.52 a barrel, after a 1.8% drop on Tuesday.

US crude inventories rose by 533,000 barrels in the last week to 448.5 million barrels, the Energy Information Administration (EIA) said on Wednesday. Analysts polled by Reuters were expecting a 1 million-barrel rise.

“The market is taking the report as somewhat supportive,” said Phil Flynn, analyst at Price Futures Group.

“If we look at crude, the increase in stocks was much smaller-than-anticipated, and that is raising concerns about tightness in supply. There is no backup supply, like we normally do, as the strategic petroleum reserve is heavily drawn.”

Crude has rallied in 2023, with global benchmark Brent crude topping $89 a barrel this week for the first time since early December on the ending of China’s COVID-19 controls and hopes that rises in US interest rates will soon taper off.

Weighing on prices earlier in Wednesday’s session was a report on Tuesday that US crude stocks rose by about 3.4 million barrels in the week ended Jan. 20, according to market sources citing American Petroleum Institute figures.

Broader financial markets were also weaker on Wednesday, as figures published on Tuesday showed US business activity contracted in January for the seventh-straight month, raising concerns about an economic slowdown.

Elsewhere on the supply side, volume should remain steady from the Organization of the Petroleum Exporting Countries (OPEC) and its allies, a group known as OPEC+.

An OPEC+ panel is likely to endorse the group’s current policy at a Feb. 1 meeting, OPEC+ sources said on Tuesday. OPEC+ in October decided to trim output by 2 million barrels per day from November through 2023 on a weaker economic outlook.