May 11, 2022 06:13AM ET
By: AnalysisWatch
Oil prices escalated on Wednesday after dropping almost 10% in the last two sessions. This was due to supply fears as the European Union seeks support for a Russian oil embargo and Russian gas supplies to Europe through a key transit point in Ukraine dried up.
The EU has proposed an embargo on Russian oil that analysts say would further tighten the market and shift trade flows. The vote, which requires unanimity, has been delayed as Hungary opposes it.
At 05:50 AM ET, Brent crude was up $2.99, or 2.9%, at $105.45 a barrel, while U.S. West Texas Intermediate crude was up $3.09, or 3.1%, at $102.85.
Oil prices also rose on hopes of Chinese economic stimulus after inflation in China eased, and investors were reassured by signs of a decline in domestic COVID-19 infections and a disruption in Russian gas supplies.
Oil prices jumped in 2022 as the Russian invasion of Ukraine added to supply concerns, with Brent crude reaching $139 in March, its highest level since 2008. Growth concerns due to Chinese COVID curbs and U.S. interest rate hikes triggered this week's slump.
Tight supply, which major producers say is partly due to insufficient investment, continues to have a positive impact on oil prices. The energy minister of the United Arab Emirates pointed to these concerns on Tuesday.
Investor interest will focus on U.S. consumer price data at 8:30 a.m. ET Wednesday, which could shed light on whether the Federal Reserve will raise interest rates more to fight inflation.
On the oil front, the latest U.S. government supply report is due at 14:30 GMT. According to Tuesday's report from the American Petroleum Institute, analysts expect a slight decline in crude oil inventories, although they rose.