Oil prices rose slightly on Wednesday amid plenty of caution as bullish signals like falling U.S. crude stocks and a generally undersupplied market were countered by bearish factors such as uncertain Chinese demand growth and falling gas prices.
Brent crude futures for December settlement rose 60 cents, or 0.7%, to $90.63 a barrel by 0913 GMT. Earlier in the session, Brent hit a low of $89.32.
U.S. West Texas Intermediate crude for November delivery, expiring on Thursday, was at $83.59 a barrel, up 77 cents, or 0.9%. The December contract was at $82.73, up 66 cents, or 0.8%.
In the previous session, the contracts fell to their lowest in two weeks on reports of U.S. President Joe Biden’s plans to release more barrels from the Strategic Petroleum Reserve (SPR).
British and Dutch wholesale gas prices fell this week on the back of mild weather, full gas storage tanks and plentiful liquefied natural gas (LNG) tanker arrivals.
“The outlook for European gas prices over the coming months has taken a knock and with it the prospects for gas-to-oil switching,” said PVM analyst Stephen Brennock.
China this week postponed the release of some key economic data, a highly unusual move stoking fears of weak growth.
But there were also some signs of resurgent Chinese oil demand, including private mega refiner Zhejiang Petrochemical Corp (ZPC) and state-run ChemChina receiving further import quotas.
The pending European Union ban on Russian crude and oil products and the output cut from the Organization of the Petroleum Exporting Countries (OPEC) and other producers including Russia, a group known as OPEC+, of 2 million barrels per day also supported prices.
The EU’s sanctions on Russian crude and oil products will take effect in December and February, respectively.
“Supply disruptions are around the corner. We therefore expect the oil market to tighten further, overshadowing recession concerns,” said UBS analysts in a note.
“Prices need to rise above $100 a barrel in the coming months to slow demand growth and restore the supply-demand balance, in our view, given that oil inventories stand at a multi-year low.”
In the United States, crude oil stockpiles fell about 1.3 million barrels, according to market sources citing American Petroleum Institute figures on Tuesday.
Gasoline and distillate stockpiles also dropped, the sources said.
Official inventory data is due at 10:30 a.m. (1430 GMT).
