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Oil prices stable on expectations of demand recovery in China, supply concerns


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LONDON – Oil prices were stable on Wednesday as supply concerns and expectations that easing COVID-19 restrictions in China will boost demand have reduced losses from the previous session.

Brent oil rose 2 cents, or 0.2%, to $111.95 a barrel at 1412 GMT, while US West Texas Intermediate (WTI) crude rose 29 cents, or 0.26%, to $112.69 a barrel. barrel.

Hopes of further easing of the lockdown in China boosted expectations for a recovery in demand. The country’s authorities have cleared 864 of Shanghai’s financial institutions to resume operations, sources said Wednesday, and China has relaxed some COVID testing rules for US and other travelers.

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The market was also supported by ongoing supply concerns. Russian crude oil production fell nearly 9% in April from the previous month, an internal OPEC+ report found Tuesday, as Western sanctions against Moscow curbed exports.

Brent was up more than $2/bbl while WTI was up more than $3/bbl earlier in the session, but eased in afternoon trading after a change in risk sentiment as stock markets fell, UBS analyst Giovanni Staunovo said.

Bearish sentiment also followed reports that the US plans to relax sanctions against Venezuela and allow Chevron Corp to negotiate oil licenses with Venezuela’s national producer.

“While this will bring little relief to the market in the short term, it would nevertheless be a first step to ensure more oil can enter the market from the currently sanctioned countries in the future,” said Commerzbank analyst Barbara Lambrecht. .

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The European Union’s inability to convince Hungary to lift its veto on a proposed embargo on Russian oil is increasing price pressures, although some diplomats expect agreement on a phased ban at a summit in late May.

The EU plans to mobilize up to €300 billion in investments by 2030 to end its dependence on Russian oil and gas, European Commission President Ursula von der Leyen said on Wednesday.

“In the meantime, the oil market will likely follow the signs of today’s EIA update on US oil inventories,” said PVM analyst Stephen Brennock.

US crude oil and gasoline inventories fell last week, according to market sources citing figures from the American Petroleum Institute on Tuesday.

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. (Additional reporting by Isabel Kua in Singapore; editing by Louise Heavens and Jason Neely)

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This post Oil prices stable on expectations of demand recovery in China, supply concerns

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