Oil Prices Edge Up on China Demand Recovery Expectations, Tight Stocks

A pumpjack brings oil to the surface in the Monterey Shale, California, US April 29, 2013. REUTERS/Lucy Nicholson/File Photo
A pumpjack brings oil to the surface in the Monterey Shale, California, US April 29, 2013. REUTERS/Lucy Nicholson/File Photo
TT

Oil Prices Edge Up on China Demand Recovery Expectations, Tight Stocks

A pumpjack brings oil to the surface in the Monterey Shale, California, US April 29, 2013. REUTERS/Lucy Nicholson/File Photo
A pumpjack brings oil to the surface in the Monterey Shale, California, US April 29, 2013. REUTERS/Lucy Nicholson/File Photo

Oil prices edged up on Wednesday on expectations that easing COVID-19 restrictions in China will push up demand and as industry data showed drawdowns in US crude inventories.

Brent crude was up 23 cents, or 0.2%, at $112.16 a barrel at 0633 GMT, while US West Texas Intermediate (WTI) crude climbed 71 cents, or 0.6%, to $113.11 a barrel, reversing some of the previous session's losses, Reuters reported.

The authorities allowed 864 of Shanghai's financial institutions to resume work, sources said on Wednesday, a day after the Chinese city achieved a milestone of three consecutive days with no new COVID-19 cases outside quarantine zones.

"Less awful news on China offers a nip in the tail in the form of much higher oil demand and prices, which is positive for producers, but harmful for consumer sentiment," Stephen Innes, managing partner at SPI Asset Management, wrote in a note.

Raising supply concerns, US crude and gasoline stocks fell last week, according to market sources who cited American Petroleum Institute figures on Tuesday. Crude stocks fell by 2.4 million barrels for the week ended May 13, they said.

US government data is due on Wednesday.

"Soaring diesel and distillate prices, along with tight crude stocks is supporting WTI and I believe that situation will limit the downside from here in oil prices over the next few sessions," OANDA senior analyst Jeffrey Halley said.

But prices could still face some pressure after reports that the United States was allowing Chevron Corp to negotiate oil licenses with Venezuela's national producer, temporarily lifting a US ban on such talks that could lead to more crude hitting the market, ANZ Research analysts said.

The European Union's failure on Monday to persuade Hungary to lift its veto on a proposed embargo on Russian oil could also weigh, although some diplomats expect agreement on a phased ban at a summit at the end of May.

For the economic outlook, US Federal Reserve Chairman Jerome Powell on Tuesday said the central bank would ratchet up interest rates as high as needed to stifle inflation that he said threatened the foundation of the economy.



Gulf Markets Decline Amid Escalating Geopolitical Tensions in the Region

Traders monitor screens displaying stock information on the Qatar Stock Exchange in Doha. (Reuters)
Traders monitor screens displaying stock information on the Qatar Stock Exchange in Doha. (Reuters)
TT

Gulf Markets Decline Amid Escalating Geopolitical Tensions in the Region

Traders monitor screens displaying stock information on the Qatar Stock Exchange in Doha. (Reuters)
Traders monitor screens displaying stock information on the Qatar Stock Exchange in Doha. (Reuters)

Most stock markets in the Gulf region closed lower on Sunday, amid fears that increasing geopolitical tensions could lead to a broader conflict in the region.

Israeli airstrikes shook southern Beirut on Friday night and into the early hours of Sunday, marking the heaviest bombardment of the Lebanese capital since Israel escalated its campaign against Hezbollah last month.

The Saudi index fell by 1.6%, hitting its lowest level since September 11, driven by declines in Al-Tayseer (TALCO) Group shares, which dropped 5.1%, and Al Rajhi Bank, which fell by 4.8%. Meanwhile, Aramco, the heaviest-weighted stock on the index, slipped by 0.18% to reach SAR 27.

The Qatari index also lost 0.5%, as Qatar Fuel Company shares fell by 2.3%. The Kuwaiti stock market index declined by 1%, and Bahrain’s general index fell by 0.13%.

On the other hand, some Arab markets managed to recover from the losses they incurred last week. The Egyptian stock market index rose by 1.24%, while the Casablanca index posted a slight gain of 0.09%, and the Muscat index increased by 0.16%.

Similar events in April led to a wave of selling of stocks and other high-risk assets, but markets rebounded within days as concerns over the escalation of the conflict subsided.