Oil edges higher after two-day slump as demand outlook sours

Oil edged higher after tumbling around 9 per cent over two sessions on concerns over the demand outlook in the US and China.

West Texas Intermediate rose above $73 a barrel in early trading after capping its biggest two-day decline since March. The Federal Reserve affirmed its resolve to bring inflation down and warned against “unwarranted easing in financial conditions,” according to minutes of its December meeting.

Crude’s gloomy start to the new year has been exacerbated by thin liquidity, which has left the market prone to wild price swings.

A surge in Covid-19 cases in China has clouded the near-term demand outlook, overshadowing optimism that commodity consumption in the biggest importer will eventually rebound.

The industry-funded American Petroleum Institute reported US commercial crude stockpiles expanded by 3.3 million barrels last week, according to people familiar with the figures. Gasoline inventories also increased but supplies of distillates — a category that includes diesel — shrank.