Oil prices rise slightly on expectations of Chinese demand recovery and tight inventories

An aerial view shows an oil plant of Idemitsu Kosan Co. in Ichihara, east of Tokyo, Japan November 12, 2021, in this photo taken by Kyodo. Mandatory Credit Kyodo/via REUTERS

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SINGAPORE, May 18 (Reuters) – Oil prices rose slightly on Wednesday on expectations that the easing of COVID-19 restrictions in China will boost demand and as industry data showed declines in crude inventories in the United States.

Brent crude rose 23 cents, or 0.2%, to $112.16 a barrel at 0633 GMT, while U.S. West Texas Intermediate (WTI) crude climbed 71 cents, or 0.6%, to $113.11 a barrel, reversing some of the losses from the previous session.

Authorities have allowed 864 of Shanghai’s financial institutions to return to work, sources said on Wednesday, a day after the Chinese city hit a milestone of three consecutive days with no new COVID-19 cases outside quarantine zones. . Read more

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“Less dire news from China offers a tail nip in the form of much higher oil demand and prices, which is good for producers but bad for consumer sentiment,” Stephen wrote. Innes, managing partner of SPI Asset Management, in a note. .

Sparking supply concerns, U.S. crude and gasoline inventories fell last week, according to market sources who cited figures from the American Petroleum Institute on Tuesday. Crude inventories fell 2.4 million barrels for the week ended May 13, they said.

Data from the US government is expected on Wednesday.

“Soaring diesel and distillate prices, along with tight crude inventories, are supporting WTI and I believe this will limit the decline in oil prices from here in the coming sessions,” Jeffrey said. Halley, lead analyst at OANDA.

But prices could still face some pressure after reports the United States was allowing Chevron Corp (CVX.N) to negotiate oil licenses with Venezuela’s domestic producer, temporarily lifting a U.S. ban on such talks that could lead to more crude hitting the market, ANZ Research analysts said. Read more

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

For the economic outlook, US Federal Reserve Chairman Jerome Powell said on Tuesday that the central bank would raise interest rates as high as necessary to stifle inflation which he said threatened the foundations of the economy. . Read more

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Reporting by Isabel Kua; Editing by Bradley Perrett and Edmund Blair

Our standards: The Thomson Reuters Trust Principles.

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Felix J. Dixon