© Reuters. FILE PHOTO: A labyrinth of crude oil pipelines and valves is depicted during a Department of Energy tour of the Strategic Petroleum Reserve in Freeport, Texas, U.S., June 9, 2016. REUTERS/Richard Carson
LONDON (Reuters) – Oil prices edged higher on Tuesday, reversing earlier losses, as tight global supplies and an expected pickup in demand during the U.S. summer driving season balanced concerns about a possible recession and China’s COVID-19 restrictions. worry.
Analysts said that would further tighten the market, with the European Union moving closer to agreeing to ban Russian oil imports. Germany’s economy minister said on Monday that such an embargo could be agreed “within a few days.”
Another source of support is U.S. gasoline demand. Memorial Day weekend travel is expected to be the busiest in two years as more drivers hit the road and emerge from coronavirus lockdowns despite high gas prices.
“It’s a pretty challenging market right now, but it’s clear that it’s still very tight and these pressures will keep prices high,” said Craig Erlam, an analyst at brokerage OANDA.
“Without recession warnings and COVID cases in China, not so much.”
It was up 34 cents, or 0.3 percent, at $113.76 a barrel by 1325 GMT. U.S. West Texas Intermediate (WTI) crude fell 13 cents, or 0.1%, to $110.16.
Oil prices have surged this year, with Brent hitting $139 in March, its highest level since 2008, after Russia’s invasion of Ukraine fueled supply concerns.
Even so, concerns about threats to the global economy – the theme of this week’s Davos meeting – were the reason for the price drop earlier on Tuesday.
“Global growth is falling sharply,” said Tamas Varga of broker PVM.
Beijing is stepping up quarantine measures to end the outbreak, while Shanghai’s lockdown will be lifted in a little over a week.
The weekly inventory report from the American Petroleum Institute will be in focus at 2030 GMT for on-demand reading. Analysts expect gasoline and crude oil inventories to fall. [EIA/S]