Oil prices rebounded on Tuesday, stabilizing after a steep 4% fall in the previous session as concerns over China’s fuel demand were eased by the central bank’s pledge to support a battered economy. new COVID-19 restrictions.
Brent futures were at $103.50, up $1.18, or 1.15%, and US West Texas Intermediate contracts climbed to $99.41, up 87 cents, or 0.88% at 0448 GMT.
Both contracts had stabilized around 4% on Monday, with Brent falling as low as $7 a barrel during the session and WTI plunging around $6 a barrel.
China will maintain reasonably adequate liquidity in financial markets, the People’s Bank of China (PBOC) said in a statement on Tuesday, a day after the central bank announced a reduction in banks’ foreign exchange reserve ratio to support its economy. .
“On the heels of the central bank’s reduction in the foreign exchange reserve requirement ratio for banks, this has provided relief to investors,” energy market analysis provider Vanda Insights said in a note.
China’s capital, Beijing, expanded its mass COVID-19 testing from one district this week to most of the city of nearly 22 million as it braced for an impending lockdown similar to restrictions Shanghai’s strictest.
“The hit from Chinese lockdowns is over a million barrels per day and testing of 12 districts over the next five days will determine the next major move for crude prices,” wrote Edward Moya, senior market analyst for OANDA. in a note.
Separately, in a bearish signal for oil markets, five analysts polled by Reuters on average estimated U.S. crude inventories rose 2.2 million barrels in the week to April 22.
Gasoline inventories rose by about 500,000 barrels last week, and distillate inventories, which include diesel and fuel oil, are expected to have fallen by 600,000 barrels.
The poll was taken ahead of the publication of the inventory report by the American Petroleum Institute, an industry group, on Tuesday at 4:30 p.m. EDT (2030 GMT).
US Oil could fall in the range of $95.23 to $96.91
Official data from the government’s Energy Information Administration will be released on Wednesday.
Analysts said supply-side concerns over the phasing out of Russian oil from the market will continue to support prices.