Alex Lawler

LONDON (Reuters – Oil rose after falling nearly 10% in two previous sessions. Supply concerns are driving the rise in oil, as the European Union seeks support for a Russian embargo. Flows of Russian gas to Europe via a key Ukrainian transit point have also dried up.

Analysts believe that an EU embargo against Russian oil would tighten the market, and move trade flows. The vote that requires unanimous support has been delayed because Hungary is opposed to it.

The price of crude oil in the United States rose 2.9% to $105.45 per barrel by 0950 GMT. U.S. West Texas Intermediate crude was up 3.1% to $102.85.

Stephen Brennock, an oil broker at PVM said that the oil market was gaining ground as lower-tier pickers join the fray.

Oil rose on Chinese hopes for economic stimulus following China’s factory gate inflation. Investors also took consolation in the signs of lower COVID-19 levels and disruptions to Russian gas flow.

Jeffrey Halley of brokerage OANDA, said that he suspects the disruptions caused by gas in Ukraine have a steady increasing effect.

As Russia invaded Ukraine in March, oil prices rose in 2022. Brent reached $139 in March, which is the highest level since 2008. This week’s slump was caused by concerns about China’s COVID restrictions and U.S. rate rises.

Oil is still supported by a tight supply due to what some major producers claim is partially a result insufficient investment. On Tuesday, the United Arab Emirates’ energy minister raised these concerns.

Investors will focus on Wednesday’s U.S. Consumer Price Data at 1230 GMT. This could provide an indicator of whether or not the Fed will increase rates to fight inflation. [MKTS/GLOB]

The U.S. government’s latest supply report on oil is expected to be released at 1430 GMT. Although crude stock levels are expected to decrease, analysts believe they will increase. However, Tuesday’s American Petroleum Institute report indicated otherwise. [EIA/S] [API/S]