Oil rebounds as virus cases decline in China ahead of US data

Oil jumped near $103 a barrel as virus cases eased in China ahead of US inflation data that may influence the pace of interest-rate hikes.

West Texas Intermediate futures rebounded after plunging around nine per cent over two days. Infections in Shanghai and Beijing dropped on Tuesday, providing some cautious optimism of improvement after lockdowns led to surging inflation in April. The US consumer-price index print is scheduled for later Wednesday.

The oil market has been whipsawed over the last couple of months by Covid-19 restrictions across China and Russia’s invasion of Ukraine. The war has fanned inflation, driving up the cost of everything from food to fuels, with retail gasoline in the US hitting a fresh record ahead of the summer driving season.

Oil is up more than 30 per cent for the year, after economies rebounding from the pandemic underpinned a robust start. The American Petroleum Institute reported US crude stockpiles rose by 1.62 million barrels last week, according to people familiar with the figures. Fuel inventories also expanded. Government data is due later Wednesday.

“In today’s session, the focus will be squarely on the US. Inflation data for April and a weekly update concerning oil stocks will be front and center of trader sentiment,” said Stephen Brennock an analyst at brokerage PVM Oil Associates Ltd.

Prices

  • WTI for June delivery rose 2.9 per cent to $102.65 a barrel at 10:26 a.m. in London.
  • Brent for July settlement gained 2.8 per cent to $105.36.

Traders continue to monitor the EU’s efforts to agree sanctions on Russian oil imports. On Wednesday, Hungary said it will only agree if shipments via pipelines are excluded.

Shanghai reported a 51 per cent drop in new coronavirus infections on Tuesday, with zero cases found in the community – a key metric for the city to end a punishing lockdown that’s snarled global supply chains and left tens of millions of people stuck inside their homes for about six weeks.

© 2022 Bloomberg L.P.

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