Crude oil futures advanced midweek after the US government reported an increase in domestic inventories. Oil prices have calmed their meteoric ascent in the first weeks of the calendar year in recent sessions. But US crude could trigger a new rally after China reported a decline in COVID-19 cases. Is $60 feasible this year?
March West Texas Intermediate (WTI) crude oil futures rose $0.20, or 0.38%, to $52.81 per barrel at 14:52 GMT on Wednesday on the New York Mercantile Exchange. US crude has had an impressive start to 2021, surging more than 9%.
Brent, the international benchmark for oil prices, is also recording modest gains in the middle of the trading week. March Brent futures picked up $0.31, or 0.56%, to $55.95 a barrel on London’s ICE Futures exchange. Brent has also rallied more than 8% in the first month of the trading year.
According to the US Energy Information Administration (EIA), domestic crude stockpiles declined by 9.9 million barrels for the week ending January 22. The market had penciled in a drop of 1.7 million barrels.
Oil stockpiles at the Cushing, Oklahoma storage facility declined by 2.3 million barrels.
Gasoline inventories increased by 2.5 million barrels, while distillate supplies fell by 800,000 barrels.
ING Economics said in a research note that investors are taking a “wait and see” approach to oil markets:
“Market participants are now in ‘wait and see’ mode, wanting to see how lockdowns evolve in the coming weeks and months, and how successful countries are in rolling out Covid-19 vaccines.”
Meanwhile, after recording outbreaks and seeing the largest increase in confirmed infections in five months, the Chinese government has reported a drop in cases. On Wednesday, Beijing had 75 new confirmed cases, the lowest daily total since January 11. With the Lunar New Year on the horizon, government officials have been recommending citizens not to travel to help mitigate the spread of the resurgence in COVID-19 cases.
In other energy commodities, March natural gas futures picked up $0.059, or 2.24%, to $2.695 per million British thermal units (btu). March gasoline futures were unchanged at $1.5745 per gallon. March heating oil futures edged up by $0.0122, or 0.76%, to $1.6106 a gallon.