Mohi Narayan, Naveen Thakral

SINGAPORE (Reuters – Oil prices edged up on Wednesday, after rising overnight due to a drop in U.S. inventories. This boosted demand sentiment.

By 0441 GMT, the price of a barrel at $79.10 per barrel rose by 16 cents or 0.2% U.S. West Texas Intermediate oil rose 5 cents (or 0.07%) to $76.03/barrel

Jeffrey Halley from OANDA, an analyst in Asia said that there was some long-covering in Asia today. This is in spite of the fact that it’s a nondescript session.

The strength in global equity has helped both contracts to trade near their peak levels for the month.

From late November, when Omicron-based COVID-19 sent investors scrambling to safety, all asset classes including oil and equities recovered their losses.

According to American Petroleum Institute data, stocks dropped by 3.1 Million barrels during the week ending Dec. 24, according to market sources late Tuesday. This was in line with nine analysts polled at Reuters.

While gasoline inventories fell by 319,000 barrels less than anticipated, distillate stocks declined by 716,000. This compares to hopes for a drop of around 200,000 barrels.

On Wednesday, the U.S. Energy Information Administration (USEIA) will provide weekly data.

Three oil producers declared forces majeures on a portion of their oil production due to maintenance problems and shutting down oilfields, thereby supporting oil prices.

Russia will not meet its pre-pandemic oil production levels in May due to lack of spare capacity. However, it could achieve this goal later in the year according to analysts and sources.

Alexander Novak (Deputy Prime Minister), who is responsible for Moscow’s ties to the OPEC+ group oil producers, stated that May will see production reach pre-pandemic levels or approximately 11.33 million barrels per daily (bpd), of oil and condensate as it was in April 2020.

Investors await an OPEC+ meeting, Jan. 4. At which time the alliance will decide if it is going ahead with a production rise of 400,000 barrels daily in February.

Despite Omicron, OPEC+ held firm to its January production plans at its last meeting.