Jun 14, 2022 02:50AM ET
By: AnalysisWatch
Oil prices rose by around $1 in volatile trading on Tuesday as tight global supply outweighed concerns that fuel consumption would be affected by a possible slump and new COVID-19 restraints in China.
At 0634 GMT, US West Texas Intermediate crude oil was up 96 cents, or 0.8%, at USD 121.89 per barrel, while Brent crude futures were up USD 1.05, or 0.9%, at USD 123.32 per barrel.
The tight global supply situation has been exacerbated by a drop in exports from Libya due to the political crisis affecting production and ports, while other OPEC+ producers are struggling to meet production quotas and Russia is facing bans on its oil sales due to the war in Ukraine.
Analysts at ANZ Research quoted Libya's oil minister, Mohamed Aoun, as saying that the country's production had fallen to 100,000 barrels per day from 1.2 million barrels per day last year.
The market will be awaiting weekly US inventory figures from the American Petroleum Institute on Tuesday and the US Energy Information Administration on Wednesday to see how limited crude oil and fuel supply remains.
Six analysts polled by Reuters expect US crude oil stocks to have fallen by 1.2 million barrels in the week to June 3, while they forecast gasoline stocks to have risen by around 800,000 barrels and distillate stocks, which include diesel and heating oil, to have remained unchanged.
On the demand side, the latest outbreak of COVID in China, discovered in a bar in Beijing, sparked fears of a new round of lockdowns just as restrictions in the country were easing and demand for fuel was expected to strengthen.
The most populous district of the Chinese capital, Chaoyang, on Monday launched a three-day campaign of mass testing among its estimated 3.5 million residents. Some 10,000 close contacts of bar-goers were identified and their apartment buildings were closed.
Going forward, oil prices could face pressure if the US Federal Reserve surprises markets with a higher-than-expected rate hike, according to CMC Markets analyst Tina Teng.
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