OPEC+ supply gap widens in March as sanctions-hit Russian production
Oil rebounded on Wednesday after sharp losses in the previous session as concerns over tightening supplies from Russia and Libya and API data showed US crude inventories fell 4.5m barrels last week.
Brent crude futures rose 66 cents, or 0.6%, to $107.91 a barrel by 0623 GMT while the front-month West Texas Intermediate (WTI) crude futures contract, which expires on Wednesday, rose 46 cents, or 0.5%, to $103.02 a barrel. The second-month contract gained 64 cents to $102.69 a barrel.
Both benchmarks fell 5.2% in volatile trading on Tuesday after the International Monetary Fund (IMF) on Tuesday slashed its forecast for global growth by nearly a full percentage point. IMF cited the economic effects of Russia's war in Ukraine and warned that inflation was now a "clear and present danger" for many countries.
The Libyan National Oil Company declared force majeure on Tuesday, saying it failed to meet its commitments to the oil market at the Brega oil port. Global oil prices remained volatile, as further disruption to exports in Libya and, more importantly, the EU's potential to ban Russian oil kept supply and oil price risks to the upside.
However, the ongoing COVID-19 lockdowns in China, the world's largest importer of crude oil, with a better economic outlook, are putting pressure on prices.
There is still a lot of uncertainty about the next direction of the oil market and oil looks set to continue trading in a wide range in the near term.
The Organization of the Petroleum Exporting Countries, known as OPEC+, and its allies produced 1.45 million barrels (bpd) below their production targets in March, as Russia's output began to decline following Western sanctions, sources said. It was stated that Russia produced approximately 300,000 barrels below its target of 10.018 million barrels in March.
The Energy Information Administration (EIA), the statistical arm of the US Department of Energy, will release its weekly data at 1430 GMT on Wednesday.
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