Oil trades higher as supply worries provide lift

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Analysts said oil futures rose early Wednesday, with concerns about tight supplies continuing to support.

Price action
  • Crude West Texas Intermediate for delivery in August CL.1,
    + 0.30%

    + 0.33%

    + 0.30%
    rose 82 cents, or 0.7%, to $ 112.58 a barrel on the New York Stock Exchange.

  • September Brent crude BRN00,
    + 0.53%

    + 0.53%,
    the world benchmark rose 71 cents, or 0.6%, to $ 114.51 a barrel at ICE Futures Europe.

  • Back to Nymex, July gasoline RBN22,
    fell 1% to $ 3,895 a gallon, while heating oil in July HON22,
    it loses 1.3% to $ 4.1433 a gallon.

  • August natural gas NGQ22,
    increased 3% to $ 6.77 per million British thermal units.

Market drivers

Crude was heading for a fourth day of gains, with support tied to strong underlying demand. Analysts said the move was driven by movements in China to ease COVID restrictions, continued concerns about tight supplies and limited prospects for production increases, although fears of recession as the The Federal Reserve and other major central banks are tightening monetary policy aggressively in an effort to curb it. in inflation.

The Organization of the Petroleum Exporting Countries and its allies, known as OPEC +, begin a two-day meeting on Wednesday. The group is expected to confirm an already agreed supply increase of 648,000 barrels per day of production by August.

“However, as we have seen in recent months, it is very unlikely that the group will be able to increase supply by this amount, given the limited surplus capacity among members and the expectation that Russian oil production will decline as that we approach the [European Union’s] ban on Russian sea crude imports, “Warren Patterson, ING’s head of commodity strategy, said in a note.

Supply data

The American Petroleum Institute reported Tuesday afternoon that U.S. crude supply fell 3.8 million barrels during the week ended June 24, according to sources. The API also showed a weekly inventory increase of nearly 2.9 million barrels of gasoline and 2.6 million barrels of distillate.

Oil stocks at the Cushing, Oklahoma delivery center fell by 650,000 barrels last week, sources said.

The Energy Information Administration’s inventory data covering the week ending June 17 had been delayed last week due to “systems problems”. The EIA will publish its supply reports covering the week ending June 17 and Wednesday, June 24. On average, analysts surveyed by S&P Global Commodity Insights said the EIA is expected to show a decline in crude oil stocks by 500,000 barrels during the week ended June 24, along with 875,000 barrels of supply. gasoline and 525,000 barrels of distillates.

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