Oil prices broadly steady amid rising US stockpiles

Oil prices were broadly steady on Wednesday as market participants were pulled in different directions by an unexpected build in US crude and fuel inventories, global economic uncertainty and China reopening its economy.

Moving in and out of negative territory, Brent crude futures were up 53 cents, or 0.7 per cent, at $80.63 a barrel by 0921 GMT. US West Texas Intermediate (WTI) crude futures rose 41 cents, or 0.6 per cent, to $75.53 a barrel.

Both contracts rose on Monday and Tuesday, rebounding from a sharp selloff in the first week of 2023.

US crude oil stockpiles jumped by 14.9 million barrels in the week ended Jan. 6, sources said, citing data from the American Petroleum Institute (API). At the same time, distillate stocks rose by about 1.1 million barrels.

Analysts polled by Reuters had expected crude stocks to fall. Traders will be looking out for inventory data from the US Energy Information Administration typically due 1530 GMT.

The oil market has been pulled lower by worries that sharply higher interest rate hikes to tame inflation would trigger a recession and curtail fuel demand. US inflation data is due on Thursday.

If inflation comes in below expectations that would drive the dollar down, analysts said. A weaker dollar can boost oil demand as it makes the commodity cheaper for buyers holding other currencies.

Prices have not jumped but gained some support from hopes for fuel demand growth in China, the world’s second-largest oil consumer after the United States, after it eased its COVID-19 curbs and increased crude import quotas by 20 per cent.

“It is dawning on market players that China’s return to normality won’t be enough to propel oil back above $100/bbl on a sustained basis,” said PVM analyst Stephen Brennock.

“What is required is an improvement in global growth. Yet the outlook for the world economy is constrained by high inflation and tightening credit conditions.”