Oil calms down, rebounds on China’s plans to support the economy By Reuters

© Reuters. FILE PHOTO: Stock tanks seen at Petroineos Ineos petrol refinery in Lavera, France, March 29, 2022. REUTERS / Benoit Tessier

By Arathy Somasekhar

HOUSTON – Oil prices fell higher on Tuesday and returned to volatile trading as the market weighed on China’s plans to support its economy against a possible coronavirus lockdown in the capital Beijing.

Futures settled $ 2.67 or 2.6% to $ 104.99 per barrel, while US West Texas Intermediate contracts rose $ 3.16 or 3.2% to $ 101.70.

Trade was choppy with Brent touching a session of $ 101.08 and WTI $ 97.06 per barrel, pressured by concerns over demand in China, the world’s largest crude oil importer. On Monday, both benchmarks fell by about 4%.

NYMEX futures on ultra-low sulfur diesel rose 9.2% to $ 4.47 per tonne. gallon, which is a record close, after Poland said Russia warned that gas supplies would stop on Wednesday.

China’s central bank said it would increase prudent monetary policy support for the economy. Any stimulus would increase oil demand.

“Oil traders put fears of the Beijing lockdown in the rearview mirror and focus instead on more stimulus from China,” said Phil Flynn, an analyst at Price Futures Group.

The Chinese capital Beijing has expanded its COVID-19 mass test to a large part of the city of nearly 22 million as the population prepares for a shutdown similar to Shanghai’s strict curbs.

Weather-related disruptions in production at North Dakota’s Bakken shale basin support raw futures, as do extremely strong product prices, especially for diesel, said Scott Shelton, energy specialist at United ICAP (LON :).

Russia’s Gazprom (MCX 🙂 told Polish PGNiG it will stop gas supply along the Yamal pipeline from Wednesday morning, PGNiG said in a statement. Gazprom said Poland will have to start paying under a new scheme from Tuesday.

“Russia demanding payment in rubles from Poland is likely to result in a halt in gas supply and will also contribute to even stronger diesel prices,” Shelton added.

Valero energy Corp (NYSE :), the first U.S. refinery to report earnings for the quarter, said it expects product demand to remain healthy.

The European Union continued to consider options to cut imports of Russian oil as part of possible further sanctions against Moscow due to its invasion of Ukraine. Nothing has been formally proposed.

Germany said it hopes to replace all oil supplies from Russia within days. Commodity trader Trafigura Group said it would stop all purchases of crude oil from Russian state-owned oil company Rosneft by May 15.

Analysts said the release of oil from emergency reserves has eased concerns about the tight supply.

Kazakhstan has increased crude oil production after narrowing it due to a bottleneck on its largest export pipeline, sources familiar with the data told Reuters.

stocks rose 4.8 million barrels last week, according to market sources citing the American Petroleum Institute. Analysts polled by Reuters estimated that stocks had risen by about 2 million barrels a week until April 22nd.

Gasoline stocks fell by 3.9 million barrels, while distillate stocks rose by 431,000 barrels, according to sources who spoke on condition of anonymity.

The official data from the government’s energy information administration will be released on Wednesday.

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