Oil held onto gains, supported by the prospect of looser lockdown restrictions in a Chinese megacity even as a US government report showed crude inventories rising.
(Bloomberg) — Oil held onto gains, supported by the prospect of looser lockdown restrictions in a Chinese megacity even as a US government report showed crude inventories rising.
West Texas Intermediate traded around $89 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.
Meanwhile, traders parsed a mixed inventory report as US crude stockpiles rose 2.44 million barrels last week, while inventories at the largest storage hub dropped to the lowest since July. Gasoline inventories fell, according to an Energy Information Administration report.
It’s been a bumpy 24 hours for crude prices with the market grasping for direction. On Tuesday, hotter-than-expected US inflation prompted investors to bank on a continued path of sharp interest rate hikes. The market regained some support with the US said to be mulling buying oil below $80 to refill its strategic oil reserve after releases 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.
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.
Stockpiles of US distillates unexpectedly surged last week, according to the EIA. Inventories rose by about 4.2 million barrels, the biggest jump this year, taking the total to the highest level since late February.
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