(MENAFN- AzerNews) By trend
Oil futures edged slightly higher on Wednesday on hopes for
improved Chinese demand while uncertainty about how a Western cap
on Russian oil prices would play out kept markets on edge after a
sharp fall the previous session, trend reports with reference to reuters .
Brent crude futures gained 13 cents, or 0.16%, at 0416 GMT to
$79.48 a barrel, after they fell below $80 for the second time in
2022 during the previous trading session.
U.S. crude futures clawed back earlier losses and were steady
from the previous close at $74.25 a barrel.
Brent's slump on Tuesday was the largest daily decline in prices
since late September, which have traded in a $62 range this
year.
Expectations of rising China demand continued to be a positive
driver, as the country posted fewer new COVID-19 infections for two
consecutive days.
'China has (been) rapidly eased COVID-19 restrictions, which may
boost demand,' markets analyst Leon Li at CMC Markets said in a
note.
China's yuan also firmed against the U.S. dollar on Wednesday as
investors shrugged off much weaker-than-expected export and import
data and awaited a government announcement on more COVID-19 easing
measures that could revive the battered economy.
A potential drawdown in U.S. crude stockpiles of around 6.4
million barrels, according to API figures, also gave some sentiment
support on the supply front.
However, uncertainty on how the price cap on Russian oil would
play out on supply contributed to volatility. Russia is considering
three options, including banning oil sales to some countries and
setting maximum discounts at which it would sell its crude, to
counter the price cap imposed by Western powers, the Vedomosti
daily reported on Wednesday.
'There's still tons of uncertainty in the markets today,' said
Claudio Galimberti, senior vice-president at Rystad Energy, adding
the crude production drop in Russia may not be to the same extent
as earlier expectations.
Some weakness was attributed to a stronger greenback and
cautious activity in Asian stock markets.
Wall Street benchmarks also tumbled on Tuesday on uncertainty
around the direction of Federal Reserve rate hikes and further talk
of a looming recession.
Those fears were sparked by strong economic data or hawkish
signals from other policymakers.
Oil prices have dropped by more than 1% for three straight
sessions, giving up most of their gains for the year.
Some optimism remained that buyers could come back if the market
bottoms out amid a contango price structure, where forward prices
are higher than prompt prices.
'Energy traders are not confidently buying dips, but they will
if the current selloff sends (U.S. crude) prices close to the
levels the Biden administration might refill the SPR, which is in
the $70 region,' senior market analyst at OANDA Edward Moya said in
a client note, referring to the U.S. Strategic Petroleum
Reserve.
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