Oil Prices Hike, China’s Demand Recovers, Stocks Exhausted
On Wednesday, oil prices rose little on predictions that China’s COVID-19 restrictions could loosen and industry data showing a drop in US crude stockpiles.
At 0633 GMT, Brent oil was up 23 cents, or 0.2 percent, at $112.16 a barrel; WTI crude in the United States was up 71 cents, or 0.6 percent, at $113.11 per barrel; it recovered some of the previous session’s losses. On Wednesday, officials permitted 864 of Shanghai’s financial institutions to resume operations, according to sources; a day after the Chinese capital accomplished a three-day streak of no new COVID-19 cases outside quarantine zones. In a note, Stephen Innes, managing partner at SPI Asset Management, said, “Less terrible news on China presents a nip in the tail in the shape of significantly greater oil demand and prices, which is excellent for producers but damaging for consumer sentiment.”
Energy Crisis Continues
Some market sources cited API numbers on Tuesday; according to them, US crude and gasoline stockpiles decreased last week; this caused raised supply concerns. According to the report, crude stockpiles declined by 2.4 million barrels in the week ending May 13. On Wednesday, the US government will release data. “WTI is being supported by rising diesel and distillate prices, as well as constrained crude supply, and I believe this scenario will limit the drop in oil prices in the next sessions,” said OANDA senior analyst Halley.
There were rumors that the US is permitting Chevron Corp (NYSE: CVX) to discuss oil licenses with Venezuela’s national producer; therefore, temporarily eliminating a US restriction on such negotiations that might result in additional crude entering the market. According to ANZ Research analysts, this could put pressure on prices. The inability of the European Union to persuade Hungary to waive its veto on a planned embargo on Russian oil on Monday might also be a factor. However, some diplomats expect an agreement on a phased restriction at a meeting in late May. In terms of the economy, US Federal Reserve Chairman Jerome Powell warned on Tuesday. According to him, the central bank will raise interest rates as high as necessary to combat inflation; he claimed it threatened the economy’s foundation.
