SINGAPORE – Oil prices rose on Wednesday in anticipation of easing of Kovid-19 restrictions in China, boosting demand, and industry data showed a drop in inventory of US crude products.
Brent crude was up 23 cents, or 0.2%, at 33 112.16 a barrel at 0633 GMT, while US West Texas Intermediate (WTI) was up 71 cents, or 0.6%, at 3 113.11 a barrel, up from some losses in the previous session.
Authorities allowed 864 financial institutions in Shanghai to resume operations, sources said on Wednesday, a day after the Chinese city achieved a three-day milestone without a new COVID-19 case outside the segregation zone.
“Less alarming news in China puts a tail on the tail in the form of much higher oil demand and prices, which is positive for producers but detrimental to consumer sentiment,” Stephen Ines, managing partner at SPI Asset Management, wrote in a note.
Market sources cited figures from the American Petroleum Institute on Tuesday, citing supply concerns, as U.S. crude and gasoline stocks fell last week. Crude stocks fell 2.4 million barrels in the week ended May 13, they said.
The U.S. government has information on Wednesday.
OANDA senior analyst Jeffrey Haley said: “Rising diesel and distillate prices, along with tight crude stocks, are supporting WTI and I believe the situation will limit oil prices to the bottom in the next few sessions.”
But despite reports that the United States has allowed Chevron Corp to negotiate an oil license with Venezuelan national producers, prices could still be under some pressure, with the lifting of US sanctions on such talks could have a further impact on crude oil markets, ANZ research analysts said.
The European Union’s failure to lift its veto on Russia’s proposed sanctions on oil could also weigh on Monday, although some diplomats are hoping for a phased agreement at a summit in late May.
For the economic outlook, US Federal Reserve Chairman Jerome Powell said on Tuesday that the central bank would raise interest rates as needed to stem inflation, which he said undermined the economy. (Reporting by Isabel Wells; Editing by Bradley Parrett and Edmund Blair)