By Barani Krishnan

Investing.com — Oil prices rose 2% Thursday as those who sold crude down in the past two sessions covered their shorts amid a return of the supply issues that had fueled much of this year’s energy rally.

The London-traded benchmark crude oil price settled at $108.33/barrel, up 1.4%. 

Brent had lost almost 6% over two previous sessions largely due IMF downgrades of 2022/23 global economic growth and the scare over new Covid deaths in China, the world’s second largest consumer of oil.

New York-traded  , or WTI, the benchmark for U.S. crude, gained $1.60, or 1.6%, to settle at $103.79 on Thursday. 

WTI fell more than 5% in two sessions despite it closing higher the day before. Prior to Wednesday’s rebound, it fell below key $100 support to a session low of $99.89.

Thursday’s higher close in Brent and WTI came as Germany suggested it will halve its Russian oil imports by the summer and end them by the end of the year. 

Oil traders have disputed for weeks that Berlin and the rest of the EU will be able to disengage with Russia as simply as it seems despite the West’s stand that the action is appropriate and in line with its sanctions against Moscow for the war in Ukraine.

“Given how big a market (Germany) is for Russia, accounting for roughly half its exports will come as a real blow” to the supply-demand situation in oil, said Craig Erlam, analyst at online trading platform OANDA. “Oil prices are creeping higher again but remain pretty much in the middle of the range they’ve traded within for the last month.”

Oil’s narrative was also made more bullish by Libya, which said Wednesday that it was losing more than 550,000 barrels per day of oil output due to blockades at major fields and export terminals.

This North African nation is one of the major contributors to OPEC+’s global oil-producing alliance. 

OPEC+ is a group of 23 nations and was officially headed by Saudi Arabia with support from Russia. During the peak of the coronavirus epidemic, OPEC+ suffered from a lack of investment in the global oil fields. Since the February 24 Ukraine war, and subsequent sanctions against Russia, the situation has only gotten worse.