Oil lifted as Shanghai eases COVID-19 lockdown

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Oil futures rose on Wednesday as Shanghai eased the blockade of COVID-19, indicating an increase in crude oil demand.

Traders were also preparing for a Thursday meeting of the Organization of the Petroleum Exporting Countries and its allies, known as OPEC +, after The Wall Street Journal reported that the group was considering exempting Russia from its targets. production.

Price action
  • West Texas Intermediate Crude for July Delivery CL00,
    + 1.46%

    + 1.46%

    + 1.46%
    rose 88 cents, or 0.8 percent, to $ 115.55 a barrel on the New York Stock Exchange.

  • August Brent crude BRN00,
    + 1.59%

    + 1.59%,
    the world benchmark, rose $ 1.21, or 1%, to $ 116.81 a barrel on ICE Futures Europe.

  • Back to Nymex, July gasoline RBN22,
    + 3.02%
    rose 2.7% to $ 4.02 a gallon, while heating oil in July HON22,
    + 3.76%
    rose 3% to $ 4.053 a gallon.

  • July natural gas NGN22,
    + 1.95%
    rose 1.8% to $ 8.29 per million British thermal units.

Market drivers

Shanghai moved to restore full bus and subway service on Wednesday, as well as basic rail connections with the rest of China. However, more than half a million people in the city of 25 million people are still locked up or in designated control areas because cases of the virus are still being detected, the Associated Press reported.

China’s so-called zero-COVID policy has led to massive blockades, with the closure of Shanghai, its largest city and a key shopping center, which is credited with maintaining a cap on crude oil prices. which remain above $ 100 a barrel in the wake of the Russian invasion. Ukraine in late February.

The European Union agreed this week on a plan to impose a partial embargo on Russian crude oil imports.

The Tell: Why India’s big winner when EU oil ban on Russia redraws energy trade map

But oil futures lost momentum at the end of Tuesday’s session after The Wall Street Journal reported that some OPEC members were considering exempting Russia from the OPEC + oil production deal as sanctions and Partial ban on EU imports undermines the country’s ability to achieve its goals.

If agreed, this would pave the way for other producers, including Saudi Arabia and the United Arab Emirates, to pump more crude to offset Russia’s deficit, according to the report.

“This potentially opens the door for other OPEC + members to increase production more aggressively. However, in reality, given that most members have not been consistently achieving their production targets for several months, it will probably be a struggle for the group as a whole to increase production more aggressively, “said Warren Patterson, ING’s head of commodity strategy. in a note.

I will see: Why OPEC + continues to accept an increase in oil production that it cannot satisfy

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