Oil extends gains as China optimism outweighs big jump in U.S. stockpiles

SlavkoSereda/iStock via Getty Images

U.S. crude oil advanced for the fifth straight session Wednesday, despite a U.S. government report showing a massive build in domestic crude inventories.

The Energy Information Administration reported U.S. crude stockpiles surged by 19M barrels - the third largest weekly increase since EIA records began in 1982 - which analysts said largely reflects the continued slower pace of refinery runs following shut-ins during last month's winter storm.

But oil prices have enjoyed support in recent days from hopes for a strong rebound in Chinese demand, fears over the coming G-7 price cap on Russian refined products, and a weakening dollar.

Front-month Nymex February crude oil (CL1:COM) closed +3% to $77.41/bbl, while March Brent crude (CO1:COM) settled +3.2% to $82.67/bbl, its third consecutive gain.

ETFs: (NYSEARCA:USO), (BNO), (UCO), (SCO), (DBO), (DRIP), (GUSH), (USOI), (NRGU)

Analysts say oil markets are focused less on overall inventories and more on the global picture, which includes rising crude consumption in China, which has been snapping up cargoes of U.S. crude before the Lunar New Year holidays.

Earlier this week, the EIA forecast global liquid fuel consumption will top 100M bbl/day on average this year for the first time since 2019.