(Bloomberg) -- Oil rebounded after a steep slump that was triggered by prospects for further crude releases from strategic reserves, the outlook for tighter U.S. monetary policy and weaker demand in virus-hit China.
West Texas Intermediate rose as much as 2.4% in early Asian trading. Futures sank more than 5% on Tuesday after the International Energy Agency said that U.S. allies will deploy 60 million barrels from stockpiles, bolstering the 180 million-barrel release already announced by President Joe Biden.
Oil has been wracked by intense volatility over the past six weeks as Russia’s invasion of Ukraine roiled commodity markets. In response to the war, Washington and its allies have been trying to punish Russia economically, while also moving to stem the rise in energy prices that’s fanning already-elevated inflation. The scale of the combined crude releases is unprecedented.
Oil traders were also assessing the consequences of a hawkish pivot from the Federal Reserve as policy makers rein in the support they deployed to cushion the impact of the pandemic. In addition to rate rises, the Fed signaled it will reduce its bond holdings at a maximum pace of $95 billion a month.
Leading oil importer China has been trying to stamp out a virus outbreak that’s prompted lockdowns, including in the commercial hub of Shanghai. As officials tackle the challenge, tankers carrying 22 million barrels of Russian, Iranian and Venezuelan oil are piling up off the country, according to Kpler.
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