By Gina Lee
Investing.com – Oil was up on Wednesday morning in Asia, rising more than $1 a barrel in early trading over hopes of a fuel demand recovery in China, as the country gradually eases some of its COVID-19 containment measures.
Brent oil futures was up 0.38% to $112.35 by 11:42 PM ET (3:42 AM GMT). WTI futures rose 0.82% to $110.53, paring some losses after oil fell by around 2% during the previous session.
Shanghai hit its milestone of three consecutive days with no new COVID-19 cases outside quarantine zones on Tuesday and laid out plans to end a more than six-week lockdown.
"Beyond the near term, less awful news on China offers a nip in the tail in the form of much higher oil demand and prices, which is positive for producers, but harmful for consumer sentiment," SPI Asset Management managing director Stephen Innes said in a note.
Meanwhile, Tuesday’s U.S. crude oil supply data from the American Petroleum Institute showed a draw of 2.445 million barrels for the week ended May 12. Forecasts prepared by Investing.com predicted a build of 1.533 million barrels, while a 1.618-million-barrel build was reported during the previous week.
Investors now await crude oil supply data from the U.S. Energy Information Administration, due later in the day.
In Russia, production fell by nearly 9% in April 2022, and the country’s production levels fell far below those required under an Organization of the Petroleum Exporting Countries and allies (OPEC+) deal.
However, price pressures continue thanks to reports that the U.S. is allowing Chevron Corp. (NYSE:CVX) to negotiate oil licenses with Venezuela's Petróleos de Venezuela, S.A., temporarily lifting a U.S. ban on such discussions, ANZ Research analysts said in a note on Wednesday.
"The proposed changes could ultimately lead to more crude oil hitting the market."
Also on investors’ radars is the European Union's failure on Monday to persuade Hungary to lift its veto on a proposed embargo of Russian oil. However, some diplomats are hopeful that an agreement can be reached during a May 30-31 summit.
U.S. Federal Reserve Chairman Jerome Powell also said on Tuesday that the central bank would hike interest rates as needed to curb inflation.