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Oil rises on tight supplies; trade choppy on demand worries

Published 06/12/2022, 09:14 PM
Updated 06/13/2022, 03:01 PM
© Reuters. FILE PHOTO: Oil rigs are seen at Vaca Muerta shale oil and gas drilling, in the Patagonian province of Neuquen, Argentina January 21, 2019.  REUTERS/Agustin Marcarian/File Photo

© Reuters. FILE PHOTO: Oil rigs are seen at Vaca Muerta shale oil and gas drilling, in the Patagonian province of Neuquen, Argentina January 21, 2019. REUTERS/Agustin Marcarian/File Photo

By Stephanie Kelly

NEW YORK (Reuters) -Oil prices rose on Monday in a session of volatile trade as tight global supplies outweighed worries that demand would be pressured by a flare-up in COVID-19 cases in Beijing and more interest rate hikes.

Brent crude rose 26 cents to settle at $122.27 a barrel. U.S. West Texas Intermediate crude rose 26 cents to settle at $120.93 a barrel. Trade was volatile, with prices down about $3 a barrel earlier.

Oil supplies are tight, with OPEC and allies unable to fully deliver on pledged output increases because of a lack of capacity in many producers, sanctions on Russia and unrest in Libya that has slashed output.

Oil has surged in 2022 as Russia's February invasion of Ukraine compounded supply concerns and as demand recovered from COVID-19 pandemic-related lockdowns. In March, Brent hit $139, the highest since 2008. Last week, both oil benchmarks rose more than 1%.

"We were struggling with the Russian loss (of oil) so now add an exclamation point with the Libyan situation," said Robert Yawger, executive director of energy futures at Mizuho.

On Saturday, the average price of U.S. gasoline exceeded $5 a gallon for the first time, AAA data showed.

Prompting demand concerns, Beijing's most populous district Chaoyang announced three rounds of mass testing to quell a "ferocious" COVID-19 outbreak.

"We don't know what's going to happen with China. The mood is dour right now," said Phil Flynn, analyst at Price Futures.

Concern about further rate hikes, heightened by Friday's U.S. inflation data showing the consumer price index rose 8.6% last month, also pressured oil lower. [MKTS/GLOB]

© Reuters. Yang Mei Hu oil products tanker owned by COSCO Shipping gets moored at the crude oil terminal Kozmino on the shore of Nakhodka Bay near the port city of Nakhodka, Russia June 13, 2022. REUTERS/Tatiana Meel

Other financial markets fell too, as investors worried that the Federal Reserve may tighten policy too aggressively and cause a sharp economic slowdown. The S&P 500 was on track to confirm a bear market. The next Fed policy decision is on Wednesday.

In Europe, Francesco Giavazzi, the closest economic adviser to Italian Prime Minister Mario Draghi, said on Monday that European Central Bank interest rate hikes were not the right way to curb surging price rises.

Latest comments

300 a barrel soon...get ready to walk and parked your car in the garage for years..🤣
125 Brent. 200 Better.
As today shown, you are always late and use any kind of excuses. Todays happenings caused only one reason: oil get too cheap against funds and other entry point
Rises or falls? Either u dumb or i dunno how to read the article... Rofl.
The oil rise is over. There will be plenty of electric cars in steady decline in demand. It's not worth $ 50 either. I wouldn't invest in it at all.
Naaa.. It takes time for that
over all oil demand will go down if more countries starts to buy oil from russia ..it will also reduce the demand for dollar in the near future...also many times it was observed market tends to bounce back sharply near support and magically dome good news appears
And this is not suitable before US funds and banks sell first, they will not allow any kind of losts which were close today to start a minor chain reaction, thats why it gained a lot more than lost during Asia/Eu time
China might outmaneuver the west.
China's been stocking up on Russian oil at $60 a barrel (half of what were all paying) So, there would be no demand increase on the rest of the world's supply if China opened up fully. Why would they starting paying twice as much? Would you pay twice as much to fill your cars gas tank? The article here is a wee misleading.
might as well go back to horse and buggy. Maybe back to wood burning stoves
Well, I guess we should all just sell our oil equities we bought in 2020…. Because oil is dead…. Totally. The supply crisis is completely irrelevant now that nothing has changed. Way to sell it Reuters. We would expect no better from you than fake news.
Fake news...? I don't think you read the article or you just can't read. Let me guess fox is "real news"??
Nope. Fox news is garbage too. You guessed wrong. Wake up already. It’s all propaganda. If it has an agenda it is a narrative. If it is a narrative, it is not news. That is called propaganda. They used to call it yellow journalism and prosecute people for it.
The new normal. Supply chain disruptions will continue, and that will keep prices high. Will likely worsen during winter, covid season. A new variant will likely crash ghe s&P to low 2000s. Then the new bull cycle will start.
SP 2000? 50% drop, you smoked too much.Maybe 3500
Government intervention and policies are what’s driving the supply chain problems. Covid has all but finished since the less harmful Omicron showed up, as the scientists had predicted.
Lockdown Xi Jimping, please.
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