By Barani Krishnan

Investing.com — Oil prices were up just slightly on Wednesday afternoon as new COVID-related deaths in China appeared to absorb the market’s attention, raising questions about near-term demand in the world’s No.2 oil importer.

A whopping 8-million barrel drawdown in U.S. crude reported by the Energy Information Administration, or EIA, for last week — double the build expected by analysts — was ditched aside by traders, despite the data helping a barrel rise about $1 in pricing minutes after the report surfaced. 

EIA also revealed blow-out figures for distillate consumption, which is largely refined to fuel diesel.

The EIA data showed that crude prices dropped by about 2% initially, but they rebounded slightly Wednesday afternoon. Prices tumbled about 5% on Tuesday, ending a four-day rally after the International Monetary Fund slashed its 2022/23 world growth forecasts due to inflation and other economic challenges triggered by Russia’s invasion of Ukraine.

COVID-related deaths in Shanghai, reported to be three on Monday and another seven on Tuesday, have reinforced fears that the pandemic might be returning in a bigger way to China’s second-largest city that has been in lockdown for weeks now.

“The downward revisions to growth forecasts from the IMF and World Bank in recent days (and) the war in Ukraine and lockdowns in China … will weigh on demand this year,” said Craig Erlam, analyst at online trading platform OANDA.

By 1:20 pm ET (17:20 GMT), a London-traded international benchmark for crude oil was at $107.32 per bar, an increase of 7 cents or 0.1%. The session low was $104.67.

New York-traded  , or WTI, the benchmark for US crude, was up 51 cents, or 0.5%, to trade at $102.56, after breaking below the $100 support earlier with a session low at $99.89.

In Shanghai, officials pleaded with residents to cooperate, after some people, weary from weeks of lockdown rules, refused to adhere to testing procedures for the virus amid a rare burst of public anger at the city’s pandemic controls.

Chinese officials said that the 7 people who died Tuesday night were between 60-101 years old and had not been vaccinated. The seven had also preexisting medical conditions.

A slew of Chinese economic data this week confirmed that the world’s second-largest economy has sputtered as the government’s zero-Covid policy clashes with the biggest outbreak of the virus in two years in the second largest economy.

These included retail sales which fell 3.5% over the past year, marking the worst drop in annual sales since 2020. Also, unemployment rose to 5.8% which is higher than the government’s goal of 5.5%. It was also the worst increase since May 2020.

China and commodities markets were also rattled by concerns that the Federal Reserve’s aggressive rate increases to counter the nation’s worst inflation for 40 years, could cause a slump in commodity prices. 1 economy.

EIA cited positive stockpiles data, but it did not provide a temporary respite from the recent price declines.

EIA reports that the number of barrels fell 8.02 million for the week ending April 15. Analysts tracked by Investing.com had predicted a rise of 2.47 million instead, to add to the previous week’s build of 9.34 million.

Adding to that crude decline was the release of a further 8.1 million barrels from the U.S. Strategic Petroleum Reserve, or SPR, by the Biden administration which is trying to relieve the supply deficit in global oil markets caused by the West’s sanctions on Russia.  The EIA stated that SPR stockpiles fell to their lowest point since February 2002.

fell 761,000 barrels versus analysts’ expectations for a draw of 976,000. The previous week saw gasoline see a decrease of 3.65 millions barrels.

tumbled by 2.66 million barrels, adding to the previous week’s 2.9 million-barrel draw. Analysts predicted a drop of only 829,000 barrels last week.