Oil prices climbed on Wednesday after industry data showed U.S. crude stockpiles fell unexpectedly last week and China, the world’s second-biggest oil user, recorded its lowest daily rise in COVID-19 cases in more than two weeks.

Brent crude futures climbed 39 cents, or 0.7%, to $56.30 a barrel at 0736 GMT, adding to a small gain on Tuesday.

U.S. West Texas Intermediate (WTI) crude futures rose 37 cents, or 0.7%, to $52.98 a barrel, rebounding from Tuesday’s loss.

“WTI is slightly firmer on the back of a larger-than-expected draw in U.S. crude inventories reported by the API, which is offset by builds in gasoline and distillates,” said Vandana Hari, oil market analyst at Vanda Insights.

The American Petroleum Institute (API) reported crude oil inventories in the United States, the world’s biggest oil consumer, fell by 5.3 million barrels in the week to Jan. 22 compared with analysts’ expectations in a Reuters poll for a build of 430,000 barrels. [API/S]

 

However, the data showed gasoline stocks rose by 3.1 million barrels, which was much more than expected.

The API data showed distillate fuel inventories, which include diesel and heating oil, rose by 1.4 million barrels, compared to expectations for a draw of 361,000 barrels and refinery runs fell by 76,000 barrels per day.

Having climbed to multi-month highs at the start of the year, the rally in oil prices appears to have run out of steam and prices have been range-bound in recent weeks, analysts said.

“Market participants are now in ‘wait and see’ mode, wanting to see how lockdowns evolve in the coming weeks and months, and how successful countries are in rolling out Covid-19 vaccines,” ING economics said in a note.

 

Still, prices were supported as concerns about a sharp drop in travel over the Lunar New Year in China eased. China, the world’s largest oil importer, has recently grappled with a coronavirus resurgence but the number of new cases appears to be declining.

Official data showed 75 new confirmed cases of COVID-19 on Wednesday, the lowest daily rise since Jan. 11.

Typically, hundreds of millions of Chinese travel during the Lunar New Year holiday, which starts on Feb. 11. But government officials have been urging people not to travel to help contain the recent increase in coronavirus infections.

In a note, ANZ Research cited Chinese Ministry of Transport estimates that the number of passenger trips taken will be down 40% from 2019.