Oil settles up, rebounds on China’s plans to support economy – Metro US

Oil settles up, rebounds on China’s plans to support economy

Aerial view of the Petroineos Ineos petrol refinery in Lavera
Aerial view of the Petroineos Ineos petrol refinery in Lavera

HOUSTON -Oil prices settled higher on Tuesday, rebounding in volatile trading as the market weighed China’s plans to support its economy against a possible coronavirus lockdown in its capital Beijing.

Brent crude futures settled up $2.67, or 2.6%, at $104.99 a barrel, while U.S. West Texas Intermediate contracts were up $3.16, or 3.2%, at $101.70.

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

NYMEX ultra-low-sulfur diesel futures rose 9.2% to settle at $4.47 a gallon, a record close, after Poland said Russia warned that gas supply would stop on Wednesday.

China’s central bank said it will step up prudent monetary policy support to the economy. Any stimulus would boost oil demand.

“Oil traders are putting Beijing lockdown fears in the rear-view mirror and instead are focusing on more stimulus coming from China,” said Phil Flynn, an analyst at Price Futures Group.

The Chinese capital Beijing has expanded its COVID-19 mass testing to much of the city of nearly 22 million as the population braces for a lockdown similar to Shanghai’s stringent curbs.

Weather-related outages in production in North Dakota’s Bakken shale basin are supporting crude futures, as are extremely strong product prices, especially for diesel, said Scott Shelton, energy specialist at United ICAP.

Russia’s Gazprom told Poland’s PGNiG it will halt gas supplies along the Yamal pipeline from Wednesday morning, PGNiG said in a statement. Gazprom said Poland would need to begin making payments under a new scheme as of Tuesday.

“Russia demanding payment in Rubles from Poland is likely to result in a halt in Gas supplies and will also contribute to even stronger diesel prices” Shelton added.

Valero Energy Corp, the first U.S. refiner 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 over its invasion of Ukraine. Nothing has been formally proposed.

Germany said it hopes to replace all deliveries of oil from Russia within days. Commodities trader Trafigura Group said it will stop all purchases of crude from Russia’s state oil company Rosneft by May 15.

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

Kazakhstan has ramped up crude production after curtailing it due to a bottleneck on its major exports pipeline, sources familiar with the data told Reuters.

U.S. crude stocks rose by 4.8 million barrels last week, according to market sources citing American Petroleum Institute. Analysts polled by Reuters estimated that inventories had increased by about 2 million barrels in the week to April 22.

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

The official government Energy Information Administration data is due on Wednesday.

(Additional reporting by Rowena Edwards in London, Mohi Narayan in New Delhi and Liz Hampton in Denver; Editing by Louise Heavens, David Goodman, Mark Heinrich and David Gregorio)