Singapore, Nov 2 (BNA): Oil prices rose more than 1% after industry data showed a surprise drop in US crude inventories, indicating continued demand despite a sharp rise in interest rates that dampened global growth.
Brent crude futures rose $1.13, or 1.2%, to $95.78 a barrel at 0441 GMT, while US West Texas Intermediate crude futures rose $1.26, or 1.4%, to $89.63 a barrel, Reuters reported.
Both benchmark contracts rose about 2% in the previous session on the back of a weak US dollar and after an unconfirmed note on social media that said the Chinese government would study ways to relax COVID rules from March 2023, which could boost demand in the world’s second-largest oil user. .
In another positive sign for demand, data on Tuesday from the American Petroleum Institute showed that crude oil stocks fell by about 6.5 million barrels for the week ending October 28, according to market sources.
On average, eight analysts polled by Reuters had expected crude stocks to rise by 400,000 barrels.
At the same time, gasoline stocks fell more-than-expected, with stocks falling by 2.6 million barrels, compared with analysts’ expectations for a draw of 1.4 million barrels.
“Apart from a larger-than-expected pull in US inventory data, optimism from the uncertain news of China’s zero-COVID exit also supported oil’s upward momentum,” said CMC Markets analyst Tina Ting.
The dollar has fallen from an almost one-week high against its major peers, with traders worried ahead of an impending Federal Reserve interest rate decision.
A weak dollar makes oil cheaper for holders of other currencies and usually reflects an increased appetite for risk.
China’s policy of not spreading the Corona virus has been a major factor in curbing oil prices, as repeated shutdowns have slowed growth and slashed oil demand in the world’s second largest economy.
“However, with the EU ban on headlights now on the market, which means the oil complex could lose between 1-3 million barrels per day, oil could rise when the embargo begins and/or any indication from China was at the time. “An anticipated reopening of China is on the table,” Stephen Innes, managing partner at SPI Asset Management, said in a note.
SM