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Oil rebounded from declines due to demand concerns in China

Oil rebounded from declines due to demand concerns in China

Storage tanks at the Petronius Ineos gasoline refinery in La Vera, France, March 29, 2022. REUTERS/Benoit Tessier

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LONDON, April 26 – Oil prices rebounded in choppy trading on Tuesday as markets weighed on worries about Russian supply and Chinese demand.

By 1355 GMT, Brent crude futures rose $1.26, or 1.2%, to $103.58 a barrel. US West Texas Intermediate contracts rose 1.14 cents, or 1.2%, at $99.68.

Brent and West Texas Intermediate settled down about 4% on Monday and touched Tuesday’s lows of $101.08 and $97.06 a barrel, weighed by concerns about demand in China, the world’s largest importer of crude oil.

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The Chinese capital, Beijing, has expanded its mass testing for COVID-19 to a large part of the city of nearly 22 million as residents prepare for a lockdown similar to the strictest restrictions in Shanghai. Read more

But Brent crude rose $2/barrel earlier in the session after the People’s Bank of China said it would boost monetary policy support for the real economy.

The possibility of tight physical market supply related to the phase-out of Russian oil also heightened bullish sentiment.

German Economy Minister Robert Habeck said on Tuesday that Germany hopes to replace all oil shipments from Russia within days. Read more

Analysts said that the release of oil from emergency reserves eased concerns about tight supply to some extent.

“The focus has shifted toward the demand side of the equation and concerns about prolonged supply disruptions have been greatly mitigated by the release of 240 million barrels of SPR oil by members of the International Energy Agency and the apparent, albeit somewhat opaque, dealing in oil,” he said. Russian”. Tamas Varga of the PVM oil broker.

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In a bearish sign for oil markets, five analysts polled by Reuters estimated on average that US crude inventories increased 2.2 million barrels in the week ending April 22.

The survey was conducted before the release of the inventory report from the American Petroleum Institute at 4:30 PM ET (2030 GMT) on Tuesday. Official government Energy Information Administration data is due on Wednesday.

Separately, the CPC pipeline and Black Sea terminal, which ships about 80% of Kazakhstan’s crude exports, returned to full capacity on April 23 after operating at half capacity for several weeks due to mooring points damaged by the storm.

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Additional reporting by Mohi Narayan in New Delhi and Liz Hampton in Denver. Editing by Louise Heavens and David Goodman

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