Oil shrugged off a large U.S. crude stockpile build, with prices rising as traders focused on China as it speeds up purchases ahead of the Lunar New Year.

West Texas Intermediate gained 3.1 per cent to settle above US$77 a barrel on Wednesday. The price moved higher for a fifth straight day, the longest streak since early October. 

The strongest driver for prices remains China’s crude consumption. Chinese companies have been snapping up cargoes of U.S. crude before Lunar New Year holidays. Earlier this week, the government issued a bumper batch of import quotas, spurring hopes of improved crude consumption.

U.S. crude inventories rose by 18 million barrels last week, the biggest jump since February 2021, according to Energy Information Administration data. The move was largely anticipated by the market following a southern freeze that idled much of the US Gulf Coast’s refining capacity.

“Markets are less focused on less overall inventories and more on the global picture,” said Brian Kessens, a portfolio manager at Tortoise. “Globally, the focus is China, and that’s going to be the macro-driver of crude oil throughout the first quarter.”

Oil has had a volatile start to 2023, slumping almost 10 per cent in the first two sessions of the year on global recession concerns, before subsequently trending higher. Investors are keenly watching for clues on the outlook for US monetary policy, with JPMorgan Chase & Co.’s Chief Executive Officer Jamie Dimon saying rates may have to move higher than 5 per cent.

Near-term time spreads are holding in a bearish contango structure, signaling ample supply. U.S. benchmark’s prompt spread — the gap between the nearest two contracts — widened to as much as 27 cents after having started at 19 cents at the beginning of the year.

Prices:

• WTI for February rose US$2.29 to settle at USS$77.41 a barrel in New York.
• Brent for March settlement advanced US$2.57 to settle at US$82.67 a barrel.