Oil prices dip after unexpected rise in US crude inventories

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Oil slipped on Thursday after industry data showed a surprise increase in US crude inventories that revived pandemic-related demand concerns, but
United States stimulus hopes limited the price fall.

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Brent crude futures fell 21 cents, or 0.4 percent, to $55.87 a barrel by 1343 GMT.

US West Texas Intermediate (WTI) crude futures fell 25 cents, or 0.5 percent, to $53.06 a barrel, following two days of gains on expectations of massive COVID-19 relief spending under new US President Joe Biden.

US crude oil inventories rose 2.6 million barrels in the week to January 15, data from industry group the American Petroleum Institute showed, compared with analysts’ forecasts in a Reuters poll for a 1.2 million barrel fall.

Official Energy Information Administration (EIA) inventory data is due on Friday.

“If delayed EIA numbers tomorrow show a similar crude oil build, it would be the first build seen since early December,” analysts at bank ING said.

Rising coronavirus cases in China, the world’s largest crude oil importer, also weighed on prices.

Beijing plans to impose strict virus testing requirements during the Lunar New Year holiday season, when tens of millions of people are expected to travel, as it battles the worst wave of new infections since March 2020.

The commercial hub of Shanghai reported its first locally transmitted cases in two months on Thursday.

Longer term, Biden’s administration could be bearish for oil.

Among his first actions as president, 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.

The oil world will also follow its expected efforts to strengthen the nuclear constraints on oil producer Iran through diplomacy. It will raise the issue in early talks with foreign counterparts and allies, the White House said.

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