Oil edged lower on Wednesday, giving up earlier gains as signs of ample supply and rising U.S. crude inventories countered hopes for higher demand arising from a jump in manufacturing in top crude importer China.
Brent crude was down 17 cents, or 0.2%, at $83.28 a barrel by 1455 GMT. U.S. West Texas Intermediate (WTI) crude fell 35 cents, or 0.45%, to $76.70.
U.S. oil inventories rose by 6.2 million barrels in the week ended Feb. 24, according to market sources citing American Petroleum Institute (API) data. Official Energy Information Administration stocks figures are expected at 1530 GMT.
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, and OPEC production also rose in February, a Reuters survey.
“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 on Wednesday.
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. Oil was in positive territory earlier in the session, supported by an official index that showed China’s manufacturing activity expanded at the fastest pace in more than a decade in February, adding to hopes that the country’s recovery can offset a global slowdown and boost 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