Image: Reuters Berita 24 English - Oil prices increased on Tuesday as concerns about a possible recession and new COVID-19 limitations in C...
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| Image: Reuters |
Berita 24 English - Oil prices increased on Tuesday as concerns about a possible recession and new COVID-19 limitations in China outweighed concerns about constrained global supply.
At 0824 GMT, Brent crude futures were up 88 cents, or 0.7 percent, to $123.15 a barrel, while WTI crude was up 88 cents, or 0.7 percent, to $121.81 a barrel.
A decline in exports from Libya, which has been beset by a political instability that has harmed output and ports, has exacerbated the shortage.
Other OPEC+ members are failing to achieve their quotas, and Russia's oil is under sanctions as a result of the Ukraine conflict.
"The continued worldwide squeeze on refined goods, combined with a lack of investment to bring more supplies online from OPEC members or other sources, means lost Russian production is nowhere near being compensated by global markets," said Jeffrey Halley, senior market analyst at OANDA.
UBS boosted its Brent price projection for end-September to $130 a barrel, up from $115 before, and to $125 for the next three quarters.
"We have raised our oil price projection due to low oil stocks, declining spare capacity, and the possibility of supply growth behind demand growth in the coming months," the bank stated.
The market will be looking for weekly inventory data from the American Petroleum Institute on Tuesday and the United States Energy Information Administration on Wednesday to see how tight crude and fuel supply remains.
According to six analysts polled by Reuters, crude inventories in the United States fell by 1.2 million barrels in the week ending June 3, while gasoline inventories rose by nearly 800,000 barrels and distillate inventories, which include diesel and heating oil, remained steady.
On the demand side, China's latest COVID epidemic, which was traced to a Beijing bar, has sparked fears of a fresh round of lockdowns, just as the country's restrictions were being loosened and gasoline consumption was set to rise.
On Monday, Chaoyang, China's most populated district, began a three-day mass testing blitz among its nearly 3.5 million people.
The bar's patrons' close contacts have been identified, and their apartment buildings have been placed under lockdown.]
Looking ahead, if the US Federal Reserve shocks markets with a higher-than-expected interest rate hike to manage inflation when it meets on June 14-15, oil prices may be under pressure.
