Oil rebounds on supply shortages and anticipation of new sanctions on Russia
Oil prices rebounded on Wednesday, despite signs of progress from peace talks between Moscow and Kyiv, amid tight supply and growth prospects from new Western sanctions on Russia.
Brent crude futures touched $112.78 shortly after the open and rose 86 cents, or 0.8%, to $111.09 at 0426 GMT, reversing the previous session's 2% loss.
West Texas Intermediate (WTI) crude futures rose 82 cents, or 0.8%, to $105.06 a barrel, erasing Tuesday's 1.6% decline.
The volatile prices confuse the investors, they need to see the changes urgently in order to adapt quickly to the market situation.
Attention turned to tight supply after the American Petroleum Institute reported that crude inventories fell 3 million barrels in the week ended March 25, according to market sources. That's three times the drop some analysts had expected on average.
The market saw a sharp sell-off in the previous session after news of the attack continued despite Russia's promise to reduce military operations around Kyiv.
The price recovery shows the oil market's strong skepticism that current woes will improve.
Meanwhile, the United States and its allies are planning new sanctions on more sectors of the Russian economy that continue to occupy Ukraine, including military supply chains.
When the Organization of the Petroleum Exporting Countries and its allies, including Russia, meet on Thursday, it is said to be unlikely to exceed the 400,000 barrels per day they agreed on.
Saudi Arabia and the United Arab Emirates, key members of OPEC+, said that the group does not intend to take action against Russia because of its invasion of Ukraine and that the group's aim is only to stabilize the market, not to engage in politics.
However, oil prices face the pressure of weakening demand from China due to the mobility restrictions and lockdowns in multiple cities. Shanghai, the nation's financial hub, has extended restrictions after registering nearly 6,000 new local cases.
Gasoline and diesel wholesalers in China say inventories are rising with dropping demand from consumers, and operational rates at state-owned refineries appear to have dropped significantly.
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