Oil slipped on Wednesday, giving up an earlier gain, 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.
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, ahead of official Energy Information Administration stocks figures at 1530 GMT.
U.S. West Texas Intermediate (WTI) crude fell 10 cents, or 0.13%, to $76.66.
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 citing sources, and OPEC production rose in February according to 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.
Resilient Russian supply is keeping buying interest at bay, he added.
Oil was up 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 increase oil demand.
While China’s official manufacturing purchasing managers’ index (PMI) climbed to 52.6 last month against 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.