Oil trimmed the losses of the previous session and rallied on Wednesday as investors turned to riskier assets like commodities amid gains in equity markets and signs of renewed demand from the biggest oil importer, China.
Brent crude futures for the December settlement rose 22 cents, or 0.2%, to $90.25 a barrel as of 0620 GMT.
West Texas Intermediate (WTI) crude for November delivery was up 68 cents, or 0.8%, at $83.50 a barrel. WTI’s front-month contract expires on Thursday and the more active December contract was up 59 cents, or 0.7%, at $82.66.
In the previous session, Brent fell 1.7% and WTI fell 3.1% to a two-week low amid reports of further US exits from the Strategic Petroleum Reserve (SPR).
Oil prices rose as risk sentiment increased by upbeat US corporate earnings and emerging equity markets.
The small recovery in oil prices is thought to be due more to the positivity in stock markets and risk returns in trades rather than industry fundamentals.
Prices were also supported by signs of revived Chinese demand. Private mega-refinery Zhejiang Petrochemical Corp earned an additional 10 million tons of crude oil import quota for 2022, and state-run ChemChina received an additional 4.28 million tons. This equates to about 104 million barrels.
The European Union’s pending ban on Russian crude and petroleum products, and the decision for a 2 million barrels per day production cut from other producers, including the Organization of the Petroleum Exporting Countries (OPEC) and Russia, also kept prices strong.
The OPEC+ cut and EU embargo will squeeze supply in an already tight market. EU sanctions on Russian crude oil and petroleum products will come into effect in December and February, respectively.
A senior US official said in December the administration plans to sell 15 million barrels of oil from its reserves, this is to be the last tranche of the 180 million barrels announced earlier in the year.
U.S. crude inventories fell nearly 1.3 million barrels in the week ended Oct. 14, according to market sources based on Tuesday’s figures from the American Petroleum Institute (API). Sources stated that gasoline stocks fell by about 2.2 million barrels, while distillate stocks fell by 1.1 million barrels.
U.S. crude inventories were expected to rise by 1.4 million barrels in the week to October 14 for the second week in a row, according to a survey.
Inventory data from the Energy Information Administration (EIA), the statistical arm of the US Department of Energy, will be released Wednesday at 1430 GMT.
