Peter Nurse   

Investing.com — Tuesday’s oil prices bounced back after suffering sharp losses in the prior session. The market tried to assess the impact of China’s prolonged COVID-19 lockdowns on demand.

Futures were trading 1.2% higher at $99.67 per barrel by 8:45 ET (1245 GMT) while contracts rose 1.2% to $103.34 per barrel. The previous session ended with both benchmark contracts down by around 4%.

U.S. gallon prices were at 3.249494/gallon, up 0.9%

The market remains on tenterhooks with regard to COVID developments in China, the world’s largest importer of crude. Beijing districts have begun a week of mass testing, while Shanghai’s lockdown still continues.

OAG travel data said Tuesday that worldwide airline capacity had risen to its highest level since 2022. This was despite extended restrictions in Asia’s most important aviation market.

“The key for the market is how the situation in Beijing develops in the coming days and weeks,” said analysts at ING, in a note. “In March, apparent oil demand in China came in at around 13.3MMbbls/d, up 2% YoY. It is likely that this has taken quite a big hit over April, but we will need to wait for trade and industrial output data for April to get a better idea of the full impact.”

The ongoing conflict in Ukraine as well as the sanctions placed on Russia provide support to the market, despite China’s situation.

German political parties have urged the government to implement a plan that will eliminate Russian oil and gas imports as soon as possible.

Already, the U.S. banned Russian oil imports. The U.K. announced that it would phase them out before the end of this year. The European Union is opposed to such an action, as many member countries are heavily dependent upon Russian energy. Germany, which is the world’s largest economy, imports approximately 25% of its oil, and 40% of it gas, from Russia.

“The key upside risk for the market remains a potential EU ban on Russian oil. While it is looking more likely that we will ultimately see a ban, the uncertainty is how quickly a ban will be introduced,” ING added.

Like every week, The Reporter will provide its weekly estimation of U.S. Crude and Fuel Stocks later in the session. 

Five analysts polled for Reuters said that U.S. crude oil inventories increased by 2.2 Million barrels on an average basis in the week up to April 22. This would indicate a bearish outcome, as stocks had fallen by 4.5 million barrels in the previous week.