By Barani Krishnan
Investing.com — Oil bulls can’t seem to catch an easy break.
Just as China appeared to have relaxed in a big way its Zero-COVID policy, U.S. oil inventory data showed a huge build in petroleum products that outweighed the nation’s weekly draw in crude. That sent oil prices down for a fourth straight day.
New York-traded , or WTI, crude for January delivery was down $1.34, or 1.8%, at $72.91 per barrel by 11:30 ET (16:30 GMT). It earlier hit a session low of $72.42, a bottom not seen since the trough of $72.27. WTI has lost almost 11% since its last positive close of $81.33 on Dec. 1. Week-to-date, the U.S. crude benchmark is down about 10%.
London-traded crude for February was down 95 cents, or 1.2%, at $78.40. It earlier hit a session low of $77.71, a level not seen since its January bottom of $86.88. The global crude benchmark has lost 10% since its last positive close on Dec. 1. Week-to-date, Brent is down almost 9%.
Oil’s latest slide came after the U.S. Energy Information Administration, or EIA, reported a combined build in gasoline and distillate inventories for last week that came in above the drawdown in crude.
dropped by 5.187 million barrels, against expectations for a draw of 3.305M barrels, the EIA said in its Weekly Petroleum Status report for the period covering Nov. 25-Dec. 2.
But rose by 6.159M barrels for the same week, compared with expectations for a build of 2.208M barrels.
also rose by 5.320M barrels, against expectations for a build of 2.707M barrels.
“It’s not a great story by any stretch for anyone who’s long crude,” said John Kilduff, partner at New York energy hedge fund Again Capital. “The net build in products is above the so-called outsized draw in crude. Demand wise, indicators for gasoline and distillates, including jet fuel, aren’t really scaling in any way.”
Total product supply for finished motor gasoline was at 8.358M barrels last week, up just by 41M barrels.
Distillate fuel oil saw a decline of 106M barrels in demand to 3.55M barrels.
Kerosene-type jet fuel also saw a drop of 344M barrels for the week.
Oil prices came off their lows earlier after China announced changes to its coronavirus containment procedures that signaled a pivot from its Zero-COVID policy in the world’s largest oil importer. Beijing relaxed rules which included allowing infected people with mild symptoms to quarantine at home and dropping testing for people traveling domestically.
Even so, health experts warned that China was underprepared for any surge in COVID cases hereon and it was not known yet how the situation would progress in the weeks and months ahead.
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