Oil futures rose on Wednesday as Shanghai eased its COVID-19 lockdown, suggesting increased demand for crude.
Traders were also preparing for a meeting of the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, on Thursday, after the Wall Street Journal reported the group is considering ripping out Russia from its production goals.
West Texas Intermediate Crude Oil for July Delivery CL00,
rose 88 cents, or 0.8%, to $115.55 a barrel on the New York Mercantile Exchange.
August Brent Crude Oil BRN00,
the global benchmark rose $1.21, or 1%, to $116.81 a barrel on ICE Futures Europe.
Back on Nymex, July Gasoline RBN22,
rose 2.7% to $4.02 a gallon during July heating oil HON22,
rose 3% to $4,053 per gallon.
July natural gas NGN22,
rose 1.8% to $8.29 per million British thermal units.
Shanghai moved on Wednesday to restore full bus and subway service, as well as basic rail links with the rest of China. Still, more than half a million people in the city of 25 million are still under lockdown or in designated control zones as virus cases continue to be detected, the Associated Press reported.
China’s so-called zero-COVID policy has led to mass lockdowns, with the closure of Shanghai, its largest city and a key trading hub, blamed for keeping crude oil prices, which remain above $100 a barrel after the Russian invasion, under control hold Ukraine in late February.
The European Union this week agreed on a plan imposing a partial embargo on imports of Russian crude oil.
The Tell: Why India is the big winner as EU oil ban on Russia redraws energy trade map
But oil futures lost momentum late Tuesday after The Wall Street Journal reported that some OPEC members were considering removing Russia from the OPEC+ oil production deal as sanctions and the EU’s partial import ban undermine the country’s ability to meet its targets.
If agreed, it would clear the way for other producers, including Saudi Arabia and the United Arab Emirates, to pump more crude to make up Russia’s deficit, the report said.
“This potentially opens the door for other OPEC+ members to increase production more aggressively. However, given that most members have not consistently met their production targets for several months, it will likely be a struggle for the group as a whole to ramp up production more aggressively,” said Warren Patterson, head of commodity strategy at ING. in a note.
See: Why OPEC+ keeps agreeing to oil production increases it can’t keep
https://www.marketwatch.com/story/oil-lifted-as-shanghai-eases-covid-19-lockdown-11654086576?rss=1&siteid=rss Oil rose as Shanghai eased COVID-19 lockdown