Oil prices rose more than 1 1 a barrel in early Asian trade on Wednesday in hopes of recovering demand in China as the country slowly eased some of its stringent COVID-19 controls.
Brent crude futures were up 1.15, or 1.0%, at 4 113.08 a barrel in 0042 GMT, while US West Texas Intermediate (WTI) crude futures rose $ 1.62, or 1.4%, to 4 114.02 a barrel. .
Shanghai on Tuesday achieved the long-awaited milestone of three consecutive days without any new COVID-19 cases outside the quarantine zone and made plans on Monday to end the more than six-week-long lockdown.
Stephen Innes, managing director of SPI Asset Management, said: “Outside of the near term, the less alarming news in China has put a tailspin in the form of much higher oil demand and prices, which is positive for producers but detrimental to consumer sentiment.” A client note.
U.S. crude and gasoline stocks fell last week, market sources said, citing figures from the American Petroleum Institute on Tuesday. The U.S. government has information on Wednesday.
Russia’s production fell by about 9% in April, and the country, part of the OPEC + group of oil-producing countries, produced far less oil than was required under a deal to cut record output cuts made at the worst time of the 2020 coronavirus epidemic.
However, as the United States allows Chevron Corporation to negotiate an oil license with the Venezuelan national producer, prices remain under pressure despite the lifting of US sanctions on such talks, analysts at ANZ Research said in a client note on Wednesday.
“The proposed changes could eventually hit the market with more crude oil.”
The European Union (EU) failed on Monday in a bid to veto Hungary over Russia’s proposed oil embargo. But some diplomats have now pointed to a May 30-31 summit as a moment of agreement on phased sanctions.
In the United States, Federal Reserve Chairman Jerome Powell on Tuesday promised that the central bank would raise interest rates as needed to stem the tide of inflation, which he said undermined the economy.