Oil rises as U.S. oil stockpiles drop, new Chinese COVID-19 cases decline

By Sonali Paul
MELBOURNE, Jan 27 (Reuters) - Oil prices climbed on
Wednesday after industry data showed U.S. crude stockpiles fell
unexpectedly last week and China, the world's second-biggest oil
user, reported its lowest daily rise in COVID-19 cases,
bolstering hopes of a pick-up in demand.
U.S. West Texas Intermediate (WTI) crude CLc1 futures rose
10 cents, or 0.2%, to $52.71 a barrel at 0229 GMT, reversing
some of Tuesday's loss.
Brent crude LCOc1 futures climbed 11 cents, or 0.2%, to
$56.02 a barrel, adding to a small gain on Tuesday.
The American Petroleum Institute (API) reported crude oil
inventories in the United States, the world's biggest oil
consumer, fell by 5.3 million barrels in the week to Jan. 22
compared with analysts' expectations in a Reuters poll for a
build of 430,000 barrels. API/S
However, the data showed gasoline stocks rose by 3.1 million
barrels, which was much more than expected.
"The crude oil drawdown has offered some support to the
market in early trading this morning with the market expecting a
build," ING economics said in a note. "On the product side, the
numbers were less constructive."
The API data showed distillate fuel inventories, which
include diesel and heating oil, rose by 1.4 million barrels,
compared to expectations for a draw of 361,000 barrels and
refinery runs fell by 76,000 barrels per day.
"It's difficult for oil traders to make a definitive
near-term shift to the next price level higher given the very
uncertain near-term demand outlook," Axi Global Markets
Strategist Stephen Innes said in a note.
However, prices were supported by easing worries about a
sharp drop in travel over the Lunar New Year in China, the
world's largest oil importer, as the number of COVID-19 cases
appears to be declining.
Official data showed 75 new confirmed cases of COVID-19 on
Wednesday, the lowest daily rise since Jan. 11.
Government officials have been urging people not to travel
during the Lunar New Year holiday break, when hundreds of
millions usually travel to help contain a new wave of
coronavirus infections.
"There are rising concerns that the outbreak in China will
see crude oil demand suffer," ANZ Research said in a note,
citing Ministry of Transport estimates that the number of
passenger trips taken will be down 40% from 2019.