Oil prices climb again as US inventories fall

New Delhi

OIL prices edged higher on Wednesday (Dec 29) after rallying overnight as industry data showed a decline in US inventories, boosting demand sentiment.

Brent crude rose 26 cents, or 0.3 per cent, to US$79.20 a barrel by 3.59 pm Wednesday, Singapore time. US West Texas Intermediate (WTI) crude climbed 19 cents, or 0.2 per cent, to US$76.17 a barrel.

"Some long-covering is evident in Asia today in an otherwise nondescript session," said Oanda analyst Jeffrey Halley in a note.

Both contracts are trading near their highest levels in a month, aided by the strength in global equities.

Asset classes from oil to equities have clawed back losses from late November, when the Omicron variant of Covid-19 sent investors scurrying for safety.

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American Petroleum Institute data showed US crude stocks fell by 3.1 million barrels in the week ended Dec 24, market sources said on Tuesday, in line with expectations of 9 analysts polled by Reuters.

Petrol inventories registered a lower-than-expected decline of 319,000 barrels, while distillate stocks dropped by 716,000 barrels compared with hopes of a 200,000 barrels drop.

Oil prices have been underpinned by 3 oil producers declaring forces majeure this month on part of their oil production because of maintenance issues and oilfield shutdowns.

Russian Deputy Prime Minister Alexander Novak, in charge of Moscow's ties with the Opec+ group of oil producers, has said that the group has resisted calls from Washington to boost output because it wants to provide the market with clear guidance and not deviate from policy.

Investors are awaiting an Opec+ meeting on Jan 4, at which the alliance will decide whether to go ahead with a planned production increase of 400,000 barrels per day in February. REUTERS