Oil prices expanded their gains to about 2%, during trading today, Wednesday, May 18, amid expectations that easing restrictions imposed to combat the Corona virus in China will lead to a rise in demand.
And the authorities in China allowed about 864 financial institutions in Shanghai to resume work, one day after the Chinese city announced that there were no new cases of Corona virus for 3 consecutive days, outside the quarantine areas, according to what was published by Reuters.
Oil prices were also supported, after industry data showed a decline in US crude inventories, and with the market awaiting the release of official figures from the Energy Information Administration later in the day.
Oil prices now
The price of the futures contract for the benchmark Brent crude, for July delivery, rose by about 1.5 percent, to reach $113.53, at 12:01 pm GMT, 03:01 pm Mecca time.
US West Texas Intermediate crude, for June delivery, rose 2%, to $114.51 a barrel, reversing some losses from the previous session.
Supply concerns escalated, with US crude and gasoline stocks falling last week, according to market sources that cited figures from the American Petroleum Institute on Tuesday, May 17, which said crude stocks fell by 2.4 million barrels for the week ending May 13.
Senior analyst at OANDA Research, Jeffrey Haley, said that the rise in diesel and distillate prices, along with the scarcity of crude inventories, supports WTI, and this situation will limit the downward trend in oil prices, during the next few sessions.
According to analysts, prices may still face some pressure, after reports that the United States was allowing Chevron to negotiate oil licenses with Venezuela, temporarily lifting the US embargo on such talks, and could deal a heavy blow to crude oil in the market.
For his part, Stephen Innes, an analyst and managing partner at SBI, wrote that news of the control of the Corona virus in China significantly affects the rise in demand and oil prices, which is positive for producers, but harms consumer sentiment.
Among the causes of tension in oil prices, the European Union failed, on Monday, May 16, to persuade Hungary to lift its veto over the proposed embargo on Russian oil.
This comes despite the expectation of some diplomats that the European Union countries will agree on a phased ban at the summit at the end of this month.
As for the economic outlook, US Federal Reserve Chairman Jerome Powell said that the bank will raise interest rates to the highest levels as needed to stifle inflation, which he said threatens the foundation of the economy.
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