By Barani Krishnan
Investing.com -- Oil bulls can’t seem to catch an easy break.
Just as China appeared to have relaxed in a big way its Zero-COVID policy, U.S. oil inventory data showed a huge build in petroleum products that outweighed the nation’s weekly draw in crude. That sent oil prices plunging for a fourth straight day, to end at near one-year lows.
New York-traded West Texas Intermediate, or WTI, crude for January delivery settled down $2.24, or 3%, at $72.01 per barrel. The session low for WTI was $71.75, a bottom not seen since its Dec. 22, 2021 trough of $70.80. The U.S. crude benchmark has lost almost 12% since its last positive close of $81.33 on Dec. 1. Week-to-date, the U.S. crude benchmark is down about 11%.
London-traded Brent crude for February settled down $2.18, or 2.8%, at $77.11. It earlier hit a session low of $76.95, a level not seen since its Dec. 27 bottom of $75.75. The global crude benchmark has lost 11% since its last positive close of $86.88 on Dec. 1. Week-to-date, Brent is down about 10%.
Oil’s latest slide came after the U.S. Energy Information Administration, or EIA, reported a combined build in gasoline and distillate inventories for last week that came in above the drawdown in crude.
Crude inventories dropped by 5.187 million barrels, against expectations for a draw of 3.305M barrels, the EIA said in its Weekly Petroleum Status report for the period covering Nov. 25-Dec. 2.
But distillate stockpiles rose by 6.159M barrels for the same week, compared with expectations for a build of 2.208M barrels.
Gasoline inventories also rose by 5.320M barrels, against expectations for a build of 2.707M barrels.
“It’s not a great story by any stretch for anyone who’s long crude,” said John Kilduff, partner at New York energy hedge fund Again Capital. “The net build in products is above the so-called outsized draw in crude. Demand wise, indicators for gasoline and distillates, including jet fuel, aren’t really scaling in any way.”
Finished motor gasoline in the marketplace were at 8.358 million barrels per day last week, up just by 41,000 barrels per day.
Distillates fuel oil, meanwhile, saw a decline of 106,000 barrels per day in demand to 3.55M barrels daily.
Kerosene-type jet fuel also saw a drop, of 344,000 barrels per day, to reach 1.386M barrels daily last week.
Oil prices came off their lows earlier in the day after China announced changes to its coronavirus containment procedures that signaled a pivot from the Zero-COVID policy in the world’s largest oil importer. Beijing relaxed rules which included allowing infected people with mild symptoms to quarantine at home and dropping testing for people traveling domestically.
Even so, health experts warned that China was underprepared for any surge in COVID cases hereon and it was not known yet how the situation would progress in the weeks and months ahead.