Title: Oil prices edge up on China demand recovery expectations, tight stocks
May 18, 2022 02:40AM ET
Oil prices rose Wednesday on expectations that China's COVID-19 restrictions will boost demand, while industry data showed a drop in U.S. crude inventories.
At 02:33 AM ET, Brent crude was 23 cents, or 0.2%, higher at $112.16 a barrel, while U.S. West Texas Intermediate (WTI) crude climbed 71 cents, or 0.6%, to $113.11 a barrel, recouping some of the previous session's losses.
Sources said authorities allowed 864 financial institutions in Shanghai to resume operations on Wednesday, a day after the Chinese city reached the milestone of three consecutive days without new COVID-19 cases outside quarantine zones.
U.S. crude oil and gasoline inventories fell last week, adding to supply concerns, according to market sources citing figures released Tuesday by the American Petroleum Institute. Crude oil inventories fell by 2.4 million barrels in the week ended May 13, it said.
U.S. government data is expected Wednesday.
However, prices could remain under pressure following reports that the United States will allow Chevron Corp. to negotiate oil licenses with the Venezuelan oil producer, temporarily lifting a U.S. ban on such talks, which could lead to more crude coming to market, ANZ Research analysts said.
The European Union's failure Monday to convince Hungary to lift its veto on a proposed embargo on Russian oil could also weigh, although some diplomats expect an agreement on a gradual ban at a summit in late May.
As for the economic outlook, Federal Reserve Chairman Jerome Powell said Tuesday that the central bank will raise interest rates as high as necessary to fight inflation, which he said threatens the foundation of the economy.