Storage tanks at the Petronius Ineos gasoline refinery in La Vera, France, March 29, 2022. REUTERS/Benoit Tessier
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HOUSTON, April 26 – Oil prices settled higher on Tuesday, rebounding in choppy trading as the market weighed down China’s plans to support its economy against a possible coronavirus shutdown in its capital, Beijing.
Brent crude futures rose $2.67, or 2.6%, at $104.99 a barrel, while US West Texas Intermediate contracts rose $3.16, or 3.2%, at $101.70.
Trade was choppy with Brent touching session lows of $101.08 and $97.06 a barrel, weighed by concerns over demand in China, the world’s largest importer of crude oil. On Monday, both benchmarks settled down about 4%.
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NYMEX low-sulfur diesel futures rose 9.2% to settle at $4.47 a gallon, a record close, after Poland said Russia warned that gas supplies would be halted on Wednesday.
China’s central bank said it will strengthen prudent monetary policy support for the economy. Any stimulus would boost the demand for oil.
“Oil traders are putting Beijing’s shutdown fears in the rear-view mirror and instead focus on more stimulus coming from China,” said Phil Flynn, an analyst at Price Futures Group.
The Chinese capital, Beijing, has expanded its mass testing for COVID-19 to a large part of the city of nearly 22 million as residents prepare for a lockdown similar to the strictest restrictions in Shanghai. Read more
The weather-related outages in North Dakota’s Bakken Shale Basin are supporting crude oil futures, as are very strong product prices, especially for diesel, said Scott Shelton, energy specialist at United ICAP.
Russian Gazprom (GAZP.MM) Tell PGNiG Polish (PGN.WA) PGNiG said in a statement that it will halt gas supplies along the Yamal pipeline as of Wednesday morning. Gazprom said Poland will need to start making payments under the new scheme from Tuesday. Read more
“Russia’s demand to pay in rubles from Poland is likely to stop gas supplies and will also contribute to an increase in diesel prices,” Shelton added.
Valero Energy Company (VLO.N)It, the first US refiner to report earnings this quarter, said it expects product demand to remain healthy.
The European Union continued to consider options for reducing Russian oil imports as part of other possible sanctions against Moscow over its invasion of Ukraine. Nothing has been officially suggested.
Germany said it hoped to replace all oil shipments from Russia within days. Commodity trader Trafigura Group said it will halt all purchases of crude oil from Russia’s state oil company Rosneft by May 15.
Analysts said that freeing oil from emergency reserves eased concerns about tight supply.
Sources familiar with the data told Reuters that Kazakhstan boosted crude production after it cut back due to a bottleneck in its main export pipeline.
US crude stocks rose 4.8 million barrels last week, according to market sources citing the American Petroleum Institute. Analysts polled by Reuters estimated that stocks rose by about two million barrels in the week to April 22.
Gasoline stocks fell by 3.9 million barrels, while distillate stocks rose by 431,000 barrels, according to the sources, who requested anonymity.
Official government Energy Information Administration data is due on Wednesday.
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Additional reporting by Rowena Edwards in London, Mohi Narayan in New Delhi and Liz Hampton in Denver. Editing by Louise Heavens, David Goodman, Mark Heinrich and David Gregorio
Our criteria: Thomson Reuters Trust Principles.
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