Title: Oil Up in Asia As Supply Tightens

May 25, 2022 01:36AM ET

By: AnalysisWatch

Oil prices rose Wednesday morning in Asia, with investors weighing tight gasoline supply against the possibility of economic slowdowns and continued shutdowns in China.

Brent oil futures raised $1.26, or 1.14%, to $111.95 a barrel at 1:28 AM ET (5:28 AM GMT) and WTI futures rose 1.22%, to $111.11.

US oil inventories rose last week, but gasoline stocks fell, according to American Petroleum Institute (API) data released on Tuesday. Crude inventories rose by 567,000 barrels in the week to 10 May, a surprise increase that contrasts with the previous week's drop of 2.4 million barrels. Analysts had expected stocks to fall by 690,000 barrels.

However, gasoline stocks fell by 4.2 million barrels, which continued to fuel fears of higher gas prices and their impact on inflation. The drop in gasoline stocks and the likely price increase come at an inopportune time, with the start of the busy summer driving season in the US.

Distillate stocks also fell by 949,000 barrels.

Inventories data from the U.S. Energy Information Administration are expected on Wednesday.

In China, Shanghai continued to move slowly towards openness, but Beijing stepped up quarantine efforts as it continued to battle a month-long outbreak of COVID.

The International Energy Agency (IEA) warned this week that prices are likely to continue rising unless Chinese demand remains weak in the coming months. According to Platts, China's demand for oil fell 11.5% year-on-year in April. However, this could change if closures in various cities start to decline.