Oil prices rose on Tuesday as worries of a Chinese demand slump dissipated after Shanghai loosened certain COVID-19-related restrictions, and OPEC cautioned that increasing output sufficiently to compensate for lost Russian supply would be unfeasible.
At 0405 GMT, Brent crude prices were up $1.72, or 1.75 percent, to $100.20 a barrel, while WTI crude futures were up $1.76, or 1.87 percent, to $96.05 a barrel. On Monday, both contracts had declined by roughly 4%.
After reporting no new infections for 14 days, Shanghai’s districts said on Monday that more than 7,000 residential units had been categorised as lower-risk locations, and its districts have since begun declaring which individual compounds may be opened up.
“Both on the supply and demand fronts, market sentiment is seesawing,” said Vandana Hari, founder of oil market monitoring firm Vanda Insights.
She said that the partial lifting of Shanghai lockdowns relieved some of the negative pressure that had been building on concerns about Chinese oil consumption.
Following Russia’s invasion of Ukraine, the European Union is formulating recommendations for an EU oil embargo against Russia, according to several foreign ministers. However, members are presently at odds with threats from Russia, which refers to its operations in Ukraine as a “special operation.”
” “If Russian energy is sanctioned, the oil market is still exposed to a huge shock, and that risk remains on the table,” stated Edward Moya, a senior market analyst at OANDA.
“As crude inventories stay low, oil prices will play tug-of-war here, but energy markets will struggle to shake-off these regular announcements of further COVID limitations in China,” he added.
The spike in oil markets on Tuesday came after the Organization of the Petroleum Exporting Countries (OPEC) warned that sanctions or voluntary steps might result in the loss of 7 million barrels per day of Russian oil and other liquids exports, which would be hard to replace. find out more
In order to calm turbulent oil markets, IEA member countries intend to release 240 million barrels over the following six months, with 180 million barrels coming from US stocks at a rate of 1 million barrels per day beginning in May.
According to a preliminary Reuters poll, U.S. crude oil stockpiles are expected to rise by 1.4 million barrels in the week ending April 8, after falling for three weeks in a row.
The survey was taken ahead of the American Petroleum Institute’s (API) report, which will be released at 4:30 p.m. EDT (2030 GMT) on Tuesday.