TOKYO (Reuters) -Oil prices went up on Thursday after falling early in the day. This was due to hopes that a planned loosening of restrictions in Shanghai could boost fuel demand, while worries about tight global supplies outweighed worries that the economy would grow more slowly.
Brent crude futures for July were up $1.32, or 1.2%, at $110.43 a barrel at 7:00 GMT. Earlier in the session, they had dropped more than $1.
The price of U.S. West Texas Intermediate (WTI) crude for June went up by 62 cents, or 0.6%, to $110.21 per barrel. This was a recovery from an early drop of more than $2. At $108.26 a barrel, WTI for July was up $1.33, or 1.2%.
Prices for the first month of both benchmarks fell by about 2.5% on Wednesday.
A commodity analyst at Rakuten Securities, Satoru Yoshida, said that a drop on Wall Street made people feel bad at the start of trading because it showed that people were worried about a drop in consumption and fuel demand. [MKTS/GLOB]
Investors were worried about rising inflation around the world, China’s “zero-COVID” policy, and the war in Ukraine, which caused Wall Street to drop sharply on Thursday. [MKTS/GLOB]
“Oil markets still have a bullish trend, as a ban on importing Russian crude by the European Union is expected to make the world’s supply even tighter,” Yoshida said.
This month, the European Union came up with a new set of sanctions for Russia because it invaded Ukraine. This would include a ban on all oil imports in six months, but the measures haven’t been taken yet. Hungary is one of the countries that has been most vocal in its opposition to the plan.
Wednesday, the European Commission announced a 210 billion euro ($220 billion) plan to get Europe off of Russian fossil fuels by 2027. The plan is to use the move away from Moscow to speed up the switch to green energy.
Also, U.S. crude inventories fell last week, which was a surprise. This was because refiners increased production in response to tight product inventories and near-record exports, which have caused diesel and gasoline prices in the U.S. to reach record highs. [EIA/S]
Both the East Coast and the Gulf Coast were using more than 95 percent of their capacity, which means that these refineries were running close to their maximum speeds.
Investors in China are paying close attention to plans for Shanghai, the country’s most populous city, to loosen restrictions on June 1. This could lead to a rise in oil demand in the country, which is the top crude importer in the world.
Stephen Innes of SPI Asset Management said that the news that Shanghai planned to slowly start public transportation between districts again on May 22 was good for risk and helped oil prices.
($1 = 0.9537 euros)