Oil prices advance despite U.S. inventory rise

08 Jun Oil prices advance despite U.S. inventory rise

Oil prices rose on Wednesday, despite a likely rise in U.S. oil stocks, on the easing of Chinese COVID-19 related lockdowns and a possible strike by Norwegian oil workers.

Brent crude futures were up $1.01, or 0.8%, at $121.58 a barrel at 0927 GMT. U.S. West Texas Intermediate crude was at $120.62 a barrel, up $1.21, or 1%.

“Despite the API report showing builds for crude and oil products, oil prices are higher, supported by expectation of China easing the COVID restrictions, translating in higher demand and imports this summer,” UBS analyst Giovanni Staunovo said.

A number of Norwegian oil workers plan to strike from June 12 over pay, putting some crude output at risk of shutdown.  

Market sources said American Petroleum Institute figures on Tuesday showed U.S. crude stocks rose by 1.8 million barrels for the week ended June 3. Gasoline and distillate inventories rose by 1.8 million barrels and 3.4 million barrels, respectively.

The U.S. Energy Information Administration (EIA) will report last week’s stock levels at 1030 a.m. EDT (1430 GMT) on Wednesday.

The World Bank on Tuesday slashed its global growth forecast for 2022 by nearly a third, warning Russia’s invasion of Ukraine had compounded damage from the COVID-19 pandemic, and that many countries now faced recession.  

Meanwhile, global crude and oil product supplies remain tight, boosting Asian refiners’ diesel margins to record levels, as Western sanctions hamper exports from major producer Russia.

On Tuesday, China topped up its first batch of product export quotas aimed at reducing high domestic inventories, which have risen as pandemic lockdowns have dented demand. Despite the latest additions to the quotas, their volumes remain much lower than last year, however.