- EIA shows expected drop in US crude stocks
- Oil supplies continue to tighten around the world
NEW YORK, Oct.20 (Reuters) – Oil prices edged up Wednesday, rebounding from initial losses after US crude inventories unexpectedly fell and stocks at the country’s largest storage facility hit their lowest level in three years.
Brent crude futures rose 26 cents, or 0.3%, to $ 85.35 a barrel at 10:48 a.m. EDT (1448 GMT), lingering near multi-year highs.
U.S. West Texas Intermediate (WTI) crude, which expires Wednesday, rose 59 cents, or 0.7% to $ 83.55 a barrel, while the most active WTI contract for December rose 41 cents, or 0.5%, at $ 82.85 per barrel.
The market had softened overnight after the Chinese government stepped up efforts to contain record coal prices and ensure coal mines are operating at full capacity as Beijing prepares to ease an electricity shortage . Oil prices have been driven in part by soaring natural gas and coal prices around the world, in anticipation of the shift of power producers to oil to provide electricity.
Oil has also risen, however, as supply tightens, with OPEC choosing to sit on the sidelines rather than adding barrels to the market, and as US demand has intensified.
U.S. crude inventories fell 431,000 barrels in the most recent week, the U.S. Energy Information Administration said, against expectations of an increase, and gasoline inventories plunged more than 5 million. barrels as refiners reduced processing due to maintenance.
U.S. inventories at the Cushing, Oklahoma, delivery center hit their lowest level since October 2018. Gasoline inventories are now at their lowest since November 2019, according to the EIA.
Crude markets in general remain supported by the global coal and gas crisis, which has resulted in a switch to diesel and fuel oil for power generation.
Saudi Arabia’s energy minister said users switching from gas to oil could represent a demand of 500,000 to 600,000 barrels per day, depending on winter conditions and the prices of other energy sources. Read more
Prices for Chinese coal and other commodities collapsed early in the trade, which in turn pushed oil down after rising slightly earlier in the day.
China’s National Development and Reform Commission said on Tuesday it would bring coal prices to a reasonable level and crack down on any irregularities that disrupt market order or malicious speculation in thermal coal futures. Read more
Additional reporting by Sonali Paul in Melbourne and Koustav Samanta in Singapore; Editing by David Evans, Jason Neely, Andrea Ricci and David Gregorio
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