Oil Prices Drop After Surprise Increase In US Inventory

Oil prices slipped on Thursday after industry data showed an expected increase in U.S. crude inventories that revived COVID-19-related fuel demand concerns.

According to Reuters, Brent crude futures fell 3 cents to $56.05 a barrel. U.S. West Texas Intermediate (WTI) crude futures settled 18 cents, or 0.3%, lower at $53.13 per barrel.

Both benchmarks were said to rise over the past two days on expectations of massive COVID-19 relief spending under new U.S. President Joe Biden.

Industry data showed US crude oil inventories rose 2.6 million barrels last week, compared with analysts’ forecasts in a Reuters poll for a 1.2 million-barrel draw.

“We are on pause until we get the inventory report,” said Phil Flynn, senior analyst at Price Futures Group in Chicago.

“The market is waiting to see what we’re going to see in inventories tomorrow and stimulus down the road.”

Meanwhile, rising coronavirus cases in China, the world’s largest crude oil importer, weighed on prices, the international news agency reported.

Longer term, the Biden administration could be bearish for oil due to some of his first actions as president.

On Wednesday, Biden announced America’s return to the Paris climate accord to combat climate change 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.

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