Oil rises with China easing lockdowns, U.S. mulling SPR refill
BNN Bloomberg
Oil held onto gains, supported by the prospect of looser lockdown restrictions in a Chinese megacity and the White House contemplating buying back oil to refill strategic reserves.
West Texas Intermediate futures rose 2.5 per cent to trade above US$89 on Wednesday aided by a rally in other risk assets. Chengdu is easing Covid restrictions gradually after previous lockdown measures, a potential bright spot for demand in one of the world’s biggest oil consumers. Prices also rallied as the Biden administration considers refilling the Strategic Petroleum Reserve if prices fall below US$80 a barrel.
If the administration starts to refill the SPR, that probably puts a floor on prices around US$80 a barrel, with crude likely to rise closer to US$100 a barrel, said Matt Sallee, a portfolio manager at Tortoise, a firm that manages roughly US$8 billion in energy-related assets. “I think at a higher level that the market needs to realize just how tight US crude supplies are and how much the rest of the world is counting on US supply.”
Earlier on Wednesday, the International Energy Agency said it sees global oil consumption rising this year by about 110,000 barrels a day less than its previous forecast, though it still anticipates a 2 million barrel-a-day increase.
