Commodity Market: WTI Crude Oil extends losses on US oil inventory increase, China COVID-19 concerns hamper demand

Futures on US West Texas Intermediate Crude Oil edged lower on Wednesday following an over 3% slump in the previous trading session, as an industry report showed US crude inventories had surged more than expected.

At the same time, re-surging COVID infections in China added to fuel demand concerns.

The latest data from the American Petroleum Institute showed that crude oil stocks had increased by 5.618 million barrels during the week ended on November 4th. Analysts on average had expected an increase by 1.1 million barrels.

In addition, US gasoline inventories increased by 2.5 million barrels and distillate stocks dropped by 1.7 million barrels last week, the API data showed.

Meanwhile, Chinese health officials said over the past weekend that the country would continue with its “dynamic-clearing” approach to new COVID-19 cases.

New infections in Guangzhou and other cities across China have increased, with the 15.3 million major port and transportation hub now being China’s newest COVID epicentre.

“With that (China reopening) narrative getting pushed back, coupled with a considerable build on U.S. inventory data, implying dimming U.S. demand, the recessionary crews are back out in full force this morning in Asia,” Stephen Innes, managing partner at SPI Asset Management, was quoted as saying by Reuters.

The official report on US inventories by the Energy Information Administration, which could offer more insight into demand, is due out at 15:30 GMT today.

As of 8:27 GMT on Wednesday WTI Crude Oil Futures were losing 0.74% to trade at $88.25 per barrel. Earlier this week, the black liquid went up as high as $93.74 per barrel, which has been its strongest price level since August 30th ($97.66 per barrel).

At the same time, Brent Oil Futures were losing 0.58% on the day to trade at $94.81 per barrel. Earlier this week, Brent Oil went up as high as $99.56 per barrel, which has been its strongest price level since August 31st ($100.46 per barrel).