Oil Prices Dip on Resurgence of Coronavirus Pandemic Concerns

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 limited the downturn in prices.

U.S. West Texas Intermediate (WTI) crude futures fell 24 cents, or 0.5%, to $53.07 a barrel at 0500 GMT, following two days of gains on expectations of massive COVID-19 relief spending under new U.S. President Joe Biden.

Brent crude futures dropped 22 cents, or 0.4%, to $55.86 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.

“Oil prices look a tad vulnerable to potential profit-taking after U.S. crude stockpiles bearishly rose 2.56 million against consensus draw,” Axi chief market strategist Stephen Innes said in a note to clients.

However gasoline stocks and distillate inventories, which include diesel, distillate and jet fuel, rose by less than analysts had expected.

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.

“The government will be keen to get any outbreaks under control, particularly with the Chinese New Year fast approaching,” he said.

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.

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