Oil prices rise as tight supply counters China COVID, recession worries
Oil prices rise as tight supply counters China COVID, recession worries
Oilpricesrose about 1 dollar in volatile trade on Tuesday astightglobal supplies outweighedworriesthat fuel demand would be hit by a possiblerecessionand freshCOVID-19 curbs inChina.
USWest Texas Intermediate (WTI) crude rose 96 cents, or 0.8 per centto 121.89 dollars a barrel at 0634 GMT, while Brent crude futures rose 1.05 dollars, or 0.9 per cent, to 123.32 dollarsa barrel.
Tightglobal supplies have been aggravated by a drop in exports from Libya amid a political crisis that has hit output and ports, while other producers in OPEC+ struggle to meet their production quotas and Russia faces bans on itsoilover the war in Ukraine.
ANZ Research analysts cited Libya'soilminister Mohamed Aoun saying production in the country has dropped to 100,000 barrels per day from 1.2 million bpd last year.
"The continuing squeeze on refined products globally, as well as a lack of investment to bring online more supplies from OPEC members, or other sources, means lost Russian production is nowhere near being covered by global markets", said Jeffrey Halley, senior market analyst at OANDA, in a note.
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The market will be awaiting weekly USinventory data from the American Petroleum Institute on Tuesday and the USEnergy Information Administration on Wednesday for a view of howtightcrude and fuelsupplyremain.
Six analystsexpect UScrude inventories fell by 1.2 million barrels in the week to June 3, while forecasting that gasoline stockpiles rose by about 800,000 barrels and distillate inventories, which include diesel and heatingoil, were unchanged.
On the demand side,China's latestCOVID-19 outbreak traced to a bar in Beijing has raised fears of a new phase of lockdowns just as restrictions in the country were being eased and fuel demand was expected to firm.
The Chinese capital's most populous district, Chaoyang, kicked off a three-day mass testing campaign among its roughly 3.5 million residents on Monday.
About 10,000 close contacts of the bar's patrons have been identified, and their residential buildings put under lockdown.
Looking ahead,oilpricesmay face pressure if the USFederal Reserve surprises the markets with a higher-than-expected interest rate hike, CMC Markets analyst Tina Teng said.
"Otherwise, tradersfocus will go back toChina'sCOVIDrestrictions, when we could seepricestracing the demand outlook of the world's second-largest economy", she added.
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