Oil prices rise on hopes of Chinese demand recovery

Pump cylinders at the Belridge oilfield site in California.

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Oil prices rose more than $1 a barrel at the start of Asian trading on Wednesday on hopes of a pickup in demand in China as the country gradually eases some of its strict Covid-19 containment measures.

Brent crude futures rose $1.15, or 1.0%, to $113.08 a barrel at 0042 GMT, while US West Texas Intermediate (WTI) crude futures rose. climbed $1.62, or 1.4%, to $114.02 a barrel, paring some losses after oil prices fell about 2% in the previous session.

Shanghai hit its long-awaited milestone of three straight days with no new Covid-19 cases outside quarantine zones on Tuesday and outlined plans on Monday to end a lockdown that has lasted more than six weeks.

“Beyond the near term, less dire news from China offers a tail nip in the form of much higher oil demand and prices, which is good for producers but bad for sentiment. consumers,” said Stephen Innes, managing director of SPI Asset Management. a customer note.

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

Russia’s output fell nearly 9% in April, and the country, which is part of the OPEC+ group of oil-producing nations, produced oil well below required levels under a deal to mitigate record production cuts made during the worst of the coronavirus pandemic in 2020.

However, prices are still under pressure following reports that the United States is allowing Chevron to negotiate oil licenses with the Venezuelan national producer, temporarily lifting a U.S. ban on such talks, analysts said Wednesday. ANZ Research in a client note.

“The proposed changes could ultimately lead to more crude oil coming to market.”

The inability of the European Union on Monday to convince Hungary to lift its veto on a proposed embargo on Russian oil further weighed on the market. But some diplomats are now pointing to a May 30-31 summit as the time for an 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 stifle a surge in inflation that he said threatened the foundations of the economy. economy.

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