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Oil prices climb on hopes of China demand recovery -Breaking

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© Reuters. FILEPHOTO: This aerial view depicts an Idemitsu Kosan Co., oil refinery in Ichihara (east of Tokyo), Japan, November 12, 2021. Photo taken by Kyodo Kyodo/via REUTERS Mandatory credit Kyodo

By Isabel Kua

SINGAPORE (Reuters – The oil prices increased more than $1 a bar in Asian trading on Wednesday, fueled by hopes that China will recover its demand as it eases certain COVID-19 control measures.

U.S. West Texas Intermediate oil futures were at $113.08/barrel at 0042 GMT. Futures were also up 1.0% at $113.08/barrel at 0042 GMT. U.S. crude futures for U.S. West Texas Intermediate rose 1.4% to $114.02/barrel, reducing some losses from the drop in oil prices by about 2% over the last session.

Shanghai has reached the long-awaited milestone with three consecutive days of no COVID-19 new cases beyond quarantine zones. Monday’s announcement outlined plans to lift a prolonged lockdown lasting more than six months.

Stephen Innes, managing director of SPI Asset Management, stated in a client letter that “beyond this immediate term, less terrible news about China offers a nup in the tail” in terms of higher oil demand, prices and prices. This is good for consumers, but bad for producers.

According to market sources, gasoline stock fell last week. On Wednesday, U.S. government data will be available. [API/S][EIA/S]

Russia’s April production dropped by almost 9%. Russia, which is part the OPEC+ Group of oil-producing states, produced much less oil than was required in a contract to lower record output levels during the worst case of coronavirus pandemic 2020.

However, prices are still under pressure due to reports that the United States has allowed some imports. Chevron Corp (NYSE) will negotiate oil licenses with Venezuela’s National Producer, temporarily lifting a U.S. Ban on such talks, analysts at ANZ Research stated in a Wednesday client note.

“The changes proposed could lead to higher crude oil prices.”

The market’s woes were further weighed by Monday’s failure of the European Union to convince Hungary to remove its veto over a Russian oil embargo. Diplomats are now pointing to the May 30-31 summit for a decision on a phased embargo.

Jerome Powell, the Chairman of the Federal Reserve USA on Tuesday stated that the bank will raise its interest rates as necessary to limit inflation. He said that this was needed in order to prevent a rise that threatens the foundation of America’s economy.

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