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Oil prices climb again as US inventories fall

Oil prices climb again as US inventories fall
December 29, 2021 Reuters

NEW DELHI (Reuters) - Oil prices edged higher on Wednesday after rallying overnight as industry data showed a decline in US inventories, boosting demand sentiment.

Brent crude rose 26 cents, or 0.3%, at $79.20 a barrel by 07:59 GMT. US West Texas Intermediate (WTI) crude climbed 19 cents, or 0.2%, to $76.17 a barrel.

"Some long-covering is evident in Asia today in an otherwise nondescript session," said OANDA analyst Jeffrey Halley in a note.

Both contracts are trading near their highest levels in a month, aided by the strength in global equities.

Asset classes from oil to equities have clawed back losses from late November, when the Omicron variant of COVID-19 sent investors scurrying for safety.

American Petroleum Institute data showed US crude stocks fell by 3.1 million barrels in the week ended Dec. 24, market sources said late on Tuesday, in line with expectations of nine analysts polled by Reuters.

Gasoline inventories registered a lower-than-expected decline of 319,000 barrels, while distillate stocks dropped by 716,000 barrels compared with hopes of a 200,000 barrels drop.

Weekly data from the US Energy Information Administration is due later on Wednesday.

Oil prices have been underpinned by three oil producers declaring forces majeure this month on part of their oil production because of maintenance issues and oilfield shutdowns.

Russian Deputy Prime Minister Alexander Novak, in charge of Moscow's ties with the OPEC+ group of oil producers, has said that the group has resisted calls from Washington to boost output because it wants to provide the market with clear guidance and not deviate from policy.

Investors are awaiting an OPEC+ meeting on Jan. 4, at which the alliance will decide whether to go ahead with a planned production increase of 400,000 barrels per day in February.

At its last meeting, OPEC+ stuck to its plans to boost output for January despite Omicron.