SINGAPORE – Oil prices rose Wednesday on expectations that the easing of COVID-19 restrictions in China will boost demand, and as industry data showed a decline in US crude inventories.
Brent oil rose 23 cents, or 0.2%, to $112.16 a barrel at 0633 GMT, while US West Texas Intermediate (WTI) crude rose 71 cents, or 0.6%, to $113.11 a barrel. vat, reversing some of the losses from the previous session.
Authorities allowed 864 of Shanghai’s financial institutions to resume work, sources said on Wednesday, a day after the Chinese city reached a milestone of three consecutive days with no new COVID-19 cases outside its quarantine zones.
“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, wrote in a note. †
Supply concerns have plunged US stocks of crude oil and gasoline last week, according to market sources who quoted figures from the American Petroleum Institute on Tuesday. Crude inventories fell 2.4 million barrels for the week ending May 13, they said.
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.
But prices could still come under pressure after reports that the United States allowed Chevron Corp to negotiate oil licenses with Venezuela’s national producer, temporarily lifting a US ban on such talks, which could lead to more crude on the market, analysts at ANZ Research said.
The European Union’s inability to convince Hungary on Monday to lift its veto on a proposed embargo on Russian oil could also weigh on it, though some diplomats expect agreement on a phased ban at a summit in late May.
Turning to the economic outlook, US Federal Reserve Chairman Jerome Powell said Tuesday that the central bank would raise interest rates as high as necessary to quell inflation that he said threatened the very foundation of the economy. (Reporting by Isabel Kua; editing by Bradley Perrett and Edmund Blair)
This post Oil prices rise on expectations of demand recovery in China, tight inventories
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