Oil jumped to near $105 after slumping for two days as liquidity and volumes remain low, exacerbating market moves.
West Texas Intermediate futures rebounded more than $5 after falling below $100 a barrel on Tuesday. Oil is experiencing one of its most tumultuous trading periods ever as the war in Ukraine and the ensuing sanctions against Russia push volatility to historic levels. Covid infections in Shanghai and Beijing dropped on Tuesday, providing some cautious optimism of improvement after lockdowns led to surging inflation in April.
The oil market hasn’t been “consistent at all as of late, which has turned many away from trading the commodity,” said Rebecca Babin, senior energy trader at CIBC Private Wealth Management. “Trading crude right now is like trying to figure out the mood swings of a teenager. It can feel like a futile endeavor.”
The oil market has been whipsawed over the last couple of months by Covid-19 restrictions across China and Russia’s invasion of Ukraine. The war has fanned inflation, driving up the cost of everything from food to fuels, with retail gasoline in the US hitting a fresh record ahead of the summer driving season. In the US, consumer prices rose more than expected, indicating inflation will persist at elevated levels for longer.
“Oil prices are bouncing back strongly from two days of hefty losses amid a tightening supply outlook,” brokerage PVM Oil Associates wrote in a note.
- WTI for June delivery rose $5.17 to $104.95 a barrel at 10:03 in New York.
- Brent for July settlement gained $4.49 to $106.87.
The American Petroleum Institute reported US crude stockpiles rose by 1.62 million barrels last week, according to people familiar with the figures. Fuel inventories also expanded. Government data is due later Wednesday.
Traders continue to monitor the EU’s efforts to agree sanctions on Russian oil imports. On Wednesday, Hungary said it will only agree if shipments via pipelines are excluded.
Shanghai reported a 51% drop in new coronavirus infections on Tuesday, with zero cases found in the community — a key metric for the city to end a punishing lockdown that’s snarled global supply chains and left tens of millions of people stuck inside their homes for about six weeks.
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