© Reuters. FILE PHOTO: An aerial view shows an oil factory of Idemitsu Kosan Co. in Ichihara, east of Tokyo, Japan, Nov. 12, 2021, in this photo by Kyodo.Mandatory Credit Union/via Reuters
by Rowena Edwards
LONDON (Reuters) – Oil prices held steady on Wednesday as supply concerns and expectations that China’s easing of COVID-19 restrictions would boost demand eased losses in the previous session.
U.S. crude was up 2 cents, or 0.2%, at $111.95 a barrel by 1412 GMT, while U.S. West Texas Intermediate (WTI) crude was up 29 cents, or 0.26%, at $111.95 a barrel. A barrel of $112.69.
Hopes of a further easing of lockdowns in China boosted expectations for a recovery in demand. Chinese authorities have allowed 864 financial institutions in Shanghai to reopen and China has eased some coronavirus testing rules for U.S. and other travelers, sources said on Wednesday.
Ongoing supply concerns also supported the market. On Tuesday, an internal OPEC+ report showed that Russia’s crude oil production fell nearly 9% in April from the previous month as Western sanctions on Moscow curbed exports.
UBS analyst Giovanni Staunovo said Brent crude rose more than $2 a barrel, while WTI earlier rose more than $3 a barrel, but retreated in afternoon trade as equity markets fell and risk sentiment changed.
Amid reports that the U.S. plans to ease sanctions on Venezuela and allow Chevron Corp (NYSE: ) negotiated oil licenses with Venezuela’s state producer.
“While this won’t bring much relief to the market in the short term, it will still be a surefire way to ensure more oil is available in the future,” said Commerzbank (ETR: ) analyst Barbara Lambrecht. The first step in entering the market from countries currently under sanctions.”
The EU’s failure to persuade Hungary to lift its veto over a proposed embargo on Russian oil has added to price pressure, although some diplomats expect a phased ban to be agreed at a summit in late May.
The European Union intends to mobilize up to 300 billion euros of investment by 2030 to end its reliance on Russian oil and gas, European Commission President Ursula von der Leyen said on Wednesday.
“Meanwhile, the oil market may be taking cues from today’s EIA update on U.S. oil inventories,” said PVM analyst Stephen Brennock.
Market sources cited data from the American Petroleum Institute on Tuesday showing gasoline inventories fell last week.
On the economic outlook, U.S. Federal Reserve Chairman Jerome Powell said on Tuesday that the central bank will raise interest rates to levels needed to curb inflation, which he said threatens the fundamentals of the economy.
