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SINGAPORE – Oil prices extended gains on Wednesday in hopes of demand recovery in China as the country gradually eases some of its strict COVID-19 containment measures.

Brent crude futures were up 48 cents, or 0.4%, to $112.41 a barrel at 0410 GMT, while US West Texas Intermediate (WTI) crude futures rose 93 cents, or 0.8%. rose to $113.33 a barrel, offsetting some of the losses after oil prices fell about 2% in the previous session.

Shanghai reached the long-awaited milestone of three consecutive days with no new COVID-19 cases outside the quarantine zones on Tuesday and made plans on Monday to end a lockdown that has lasted more than six weeks.

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“Out of the short term, less terrible news about China offers a tailwind in the form of much higher oil demand and prices, which is positive for producers but damaging for consumer confidence,” Stephen Innes, managing partner at SPI Asset Management , said in a customer note.

US crude oil and gasoline inventories fell last week, market sources said, citing figures from the American Petroleum Institute on Tuesday. The data from the US government is expected on Wednesday.

“Rising diesel and distillate prices along with tight crude inventories are supporting WTI and I believe that situation will limit the downward trend in oil prices over the next few sessions,” said OANDA senior analyst Jeffrey Halley.

However, there is still pressure on prices after reports the United States will allow Chevron Corp to negotiate oil licenses with Venezuela’s national producer, temporarily lifting a US ban on such discussions, analysts at ANZ Research said in Wednesday. a customer note.

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“The proposed changes could eventually lead to more crude oil entering the market.”

Another weight on the market was the European Union’s failure on Monday to convince Hungary to lift its veto on a proposed embargo on Russian oil. But some diplomats are now pointing to a May 30-31 summit as the time for agreement on a phased ban.

In the United States, Federal Reserve chairman Jerome Powell promised on Tuesday that the central bank would raise interest rates as high as necessary to quell a rise in inflation that he said threatened the very foundation of the economy. . (Reporting by Isabel Kua; editing by Christopher Cushing and Bradley Perrett)

This post Oil prices boost gains on optimism about Chinese demand

was original published at “https://financialpost.com/pmn/business-pmn/oil-prices-extend-gains-on-china-demand-optimism”