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Oil up above $56 on lower U.S. stockpiles, drop in new Chinese COVID-19 cases

Oil rose above $56 a barrel on Wednesday after industry data showed U.S. crude inventories fell unexpectedly and as concerns eased about a resurgence in coronavirus cases in China, the world’s second-biggest oil user.

Industry group the American Petroleum Institute (API) said U.S. crude inventories fell by 5.3 million barrels. Analysts had expected them to rise. Official inventory figures are due at 1530 GMT from the Energy Information Administration.

Brent crude climbed 51 cents, or 0.9%, to $56.42 a barrel at 0920 GMT. U.S. West Texas Intermediate (WTI) crude rose 41 cents, or 0.8%, to $53.02.

“Oil prices are inching higher this morning amid data pointing to an unexpected drop in US crude stocks,” said Stephen Brennock of broker PVM.

Brent is near an 11-month high of $57.42 reached on Jan. 13, having recovered from a 21-year low below $16 in April due to a demand recovery particularly in China and huge supply cuts by OPEC and its allies, known as OPEC+.

“Oil continues consolidating,” said Jeffrey Halley of brokerage OANDA. “The Saudi Arabian cuts, OPEC+ compliance above 85% and an insatiable demand from Asia means that oil has seen its cyclical lows for 2021.”

In focus later will be the results of the U.S. Federal Reserve’s two-day policy meeting. Analysts expect the central bank to stick to its dovish tone to help speed the economic recovery.

Still, rising coronavirus infections in places like Britain and United States are limiting gains, and China has recently grappled with a coronavirus resurgence.

But official Chinese data showed 75 new confirmed cases of COVID-19 on Wednesday, the lowest daily rise since Jan. 11, easing concern of a sharp drop in travel over the Lunar New Year when hundreds of millions typically travel.
Source: Reuters (Additional reporting by Roslan Khasawneh in Singapore and Sonali Paul in Melbourne; Editing by David Evans)

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