An Unexpected Rise in US Stockpiles and The Restarting of a Significant US Refinery Pose Headwinds.

US Refineries

Crude oil prices differ slightly in Asia-Pacific trading after dropping more than 3% throughout European and US trading hours. The commodity’s demand outlook is suffering from a rise in Covid cases across China, forcing Chinese officials to ramp up containment measures. Those virus curbs reduce economic output, thus leading to lower oil consumption.

On Wednesday, the city of Guangzhou, a manufacturing hub in Southern China, raised restrictions as transmission surged despite earlier measures to stop the spread.

More than half of the city’s eleven districts are under some form of lockdown, which may increase over the coming days. The city reported over 2,500 cases on Wednesday. Chongqing, a city of around 30 million, moved to tighten measures on Thursday morning in two districts.

A surprise crude oil inventory builds in the United States, increasing sales. The US Energy Information Administration (EIA) reported a 3.9-million-barrel build for the week ending November 4. The report was well above the 1.36-million-barrel consensus prediction

Gasoline and distillate fuel inventories fell, although not as much as expected. And the production of those fuels increased to an average of 9.8 million barrels per day for gasoline and 5.2 million barrels per day for distillate fuel.

The difference between the WTI crude oil current and next month’s contract prices dropped to 0.80 on Thursday, down from 1.23 at the start of November. A falling prompt spread is generally seen as a bearish sign for prices. On Wednesday, the Port Arthur, Texas, refinery started to bring its distillation unit back online after a maintenance period, according to a Reuters report. The refinery, operated by Motiva Enterprises, is the largest in the United States, capable of producing over 600k barrels of fuel per day.

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