OIL prices settled up slightly on Wednesday as signs of ample supply, including growing US crude inventories, offset growing hopes for higher demand after a jump in manufacturing in top crude importer China.

Brent crude futures settled up 86 cents, or 1 per cent, to US$84.31 a barrel. US West Texas Intermediate crude (WTI) settled up 64 cents, or 0.8 per cent, to US$77.69.

US crude inventories rose by 1.2 million barrels last week to 480.2 million barrels last week to the highest since May 2021, government data showed, beating analyst expectations of a 457,000-barrel rise. It was the 10th straight weekly increase.

“Until this supply overhang is able to narrow amidst some decline in Cushing, US crude supply trends could further limit additional price upside,” said Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Illinois. Cushing, Oklahoma is the hub for US crude storage.

A widening discount of WTI to Brent contributed to a jump in US crude exports last week to record high at 5.6 million barrels per day, which resulted in a smaller build than in previous weeks, according to UBS analyst Giovanni Staunovo.

In other signs of ample supply, Russia’s oil production reached the pre-sanctions level for the first time in February, the Kommersant business daily reported.

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The Organization of the Petroleum Exporting Countries’ production also rose in February, a Reuters survey showed.

“China’s economy is rebounding now, and this can only be a positive driver for oil prices,” said Stephen Brennock of oil broker PVM, adding that resilient Russian supply is keeping buying interest at bay.

Russia’s second-largest oil producer Lukoil has set up ship-to-ship (STS) loadings of Urals oil near the western port of Kaliningrad, Refinitiv Eikon data showed and trading sources told Reuters.

STS loadings of Russian Urals crude hit a record high in the Mediterranean in January as traders moved cargoes onto larger vessels to make long-haul shipments to Asia more cost-effective.

An official index showed China’s manufacturing activity expanded in February at the fastest pace in more than a decade, feeding hopes for a boost in oil demand.

While China’s official manufacturing purchasing managers’ index (PMI) climbed to 52.6 last month from 50.1 in January, a private sector survey also showed activity rising for the first time in seven months.

“Another round of upside surprise in China’s PMI further provides conviction of a stronger than expected recovery, which supports a more optimistic oil demand outlook,” said Yeap Jun Rong, market strategist at IG. REUTERS