Oil rose after the Chinese megacity of Chengdu announced it would gradually loosen lockdowns, a bullish sign for demand.
(Bloomberg) — Oil rose after the Chinese megacity of Chengdu announced it would gradually loosen lockdowns, a bullish sign for demand.
West Texas Intermediate swung earlier in the session before climbing to nearly $90 a barrel on Wednesday. Chengdu is easing Covid restrictions gradually after previous lockdown measures, a potential bright spot for demand in one of the world’s biggest oil consumers. Earlier, the IEA said it sees global oil consumption rising this year by about 110,000 barrels a day less than its previous forecast, though it still anticipates a 2 million barrel-a-day increase.
The report followed a bumpy 24 hours. On Tuesday hotter-than-expected US inflation prompted investors to bank on a continued path of sharp interest rate hikes. But the US was said to be mulling buying oil below $80 to refill its strategic oil reserve after releases this year, while an industry survey pointed to a hefty expansion of separate commercial stockpiles.
The industry-funded American Petroleum Institute reported US commercial crude stockpiles expanded by 6 million barrels last week, according to people familiar with the figures. Government data due Wednesday will provide greater clarity. The holdings — separate from the Strategic Petroleum Reserve — jumped by 8.8 million barrels in the previous period.
Elsewhere, diesel margins plunged across the globe. Industry consultant OilChem earlier said that China’s Ministry of Commerce may issue a fuel export quota of 1.5 million tons, in a fourth batch allocation. Lower Chinese exports has been one factor that helped to support refined products prices this year.
Oil hit the lowest since January earlier this month as traders attempted to price in a possible global slowdown, tighter monetary policy, and lower energy demand. The potential for further interest rate hikes has underpinned the outlook for slower growth, while commodity markets broadly are wrestling with lower liquidity.
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(Corrects global agency in first deck headline of the story to IEA)
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