Oil slipped on Thursday after industry data showed a surprise build in U.S. crude inventories that reignited pandemic-led demand concerns, but stimulus hopes in the United States capped the downturn in prices.
U.S. West Texas Intermediate (WTI) crude futures dipped 19 cents, or 0.4%, to $53.12 a barrel at 0725 GMT, following two days of gains on expectations of massive COVID-19 relief spending under new U.S. President Joe Biden.
Brent crude futures were down 16 cents, or 0.3%, to $55.92 a barrel.
U.S. crude oil inventories rose 2.6 million barrels in the week to Jan. 15, according to data from the American Petroleum Institute, an industry group, compared with analysts’ forecasts in a Reuters poll for a fall of 1.2 million barrels.
“Crude is marginally lower today on a surprise build in U.S. crude stocks... On the flipside, however, crude is also supported by a weaker dollar and the prospect of higher U.S. stimulus,” said Ravindra Rao, vice president, commodities at Kotak Securities.
“U.S. crude stocks have been falling for last five weeks and this has been one of the key factors in keeping price at elevated levels. If EIA also confirms an increase in crude stocks, we may see some more correction in prices,” he added.
The U.S. Energy Information Administration is due to release its weekly inventory report on Friday.
“Holding the market back are also persistent worries over demand,” said Warren Patterson, head of commodities strategy at ING, adding that concerns have grown with a rise in COVID-19 cases in China leading to targeted lockdowns.
Elsewhere, the Biden administration has committed to curb carbon emissions and among his first actions as president, Biden announced America’s return to the Paris climate accord and revoked a permit for the Keystone XL oil pipeline project from Canada.
The administration is also committed to ending new oil and gas leasing on federal lands, Biden’s press secretary said, although Biden has not laid out a timeline for achieving that goal.
Reporting by Sonali Paul in Melbourne and Koustav Samanta in Singapore; Editing by Shri Navaratnam and Michael Perry