On Wednesday, crude prices edged up on the higher hopes for the recovery of demand from top importer China.
Brent oil futures gained 1.21% or 1.35 points to $113.15 per barrel. The international benchmark came off from a downturn of 2.02% or $111.93 per barrel yesterday.
Similarly, US West Texas Intermediate crude rose 1.33% or 1.53 points to $111.14 per barrel. It reversed Tuesday’s slump of 1.58% to $112.40 per barrel.
The world’s second-largest economy now gradually eases some of its strict COVID-19 containment measures. Subsequently, its financial hub Shanghai achieved three consecutive days with no new cases outside quarantine zones yesterday.
In line with this, authorities set out plans to end the lockdown that lasted more than six weeks. At the same time, they already allowed 864 institutions to resume work.
An additional upside for the blackish liquid is the drawdown in US crude inventories. The American Petroleum Institute reported that oil stocks skidded by 2.40 million barrels for the week ended May 13.
Moreover, Russia’s production dropped by 9.00% in April as Western sanctions hit Moscow. Then, the OPEC+ group generated oil far below the required levels.
US to ease ban on Venezuela’s crude supply
Still, crude prices face pressure as the White House allowed Chevron Corp to negotiate oil licences with Venezuela’s national producer. This permission would temporarily lift a US ban on such talks that could lead to more output in the market.
Accordingly, Chevron is the last American oil producer to maintain a presence in Venezuela. The country is home to the world’s largest crude reserves.
In addition, the European Union’s failure to persuade Hungary to lift its veto on a proposed embargo on Russian crude could also weigh. Meanwhile, diplomats expect agreement on a phased ban at the end of May.
For the economic outlook, the US Federal Reserve said they would maximize interest rates as high as needed to combat inflation.