Oil prices saw a strong bump higher on Wednesday, reversing a prior-session selloff after signs of easing COVID cases in global growth engine China. That’s as global asset markets waited on an important U.S. consumer price inflation update.
West Texas Intermediate crude for June delivery
climbed $4.06, or 4%, to $103.81 a barrel. On Tuesday, the contract fell 3.2% to $99.76 a barrel on the New York Mercantile Exchange, after trading below $100 for the first time since April 27.
June natural gas
rose 2.5% to $7.572 per million British thermal units, after a 5.1% bounce on Tuesday, and a 12% tumble on Monday.
Oil prices are down by more than 1% so far for the month of May, and have slumped nearly 6% this week. But a rebound looked under way for Wednesday as investors welcomed news of falling COVID cases in Shanghai and a scant number of cases in Beijing.
Restrictions on movement in China via a “Zero COVID” policy has fueled concerns over a growth slowdown in the world’s biggest importer of crude. That’s as supply worries are a constant backdrop for the commodity.
Morgan Stanley analysts forecast Brent oil will reach $130 a barrel by the end of 2022, with U.S. oil hitting $120, noting that fundamentals for the commodity remain strong.
Meanwhile, some analysts said the cutoff of a gas pipe in Ukraine for Russian supply that flows to European households was of concern and potentially boosting the overall backdrop for energy prices.
Ukraine’s pipeline operator, though said it would use another hub, not affecting flow, though Russia’s state-owned oil group Gazprom said gas supplies were down 25% from the day prior that it sends through Ukraine, according to a report by the Associated Press. The two countries have been at war since an invasion by Russia in late February.
Elsewhere, investors are waiting on U.S. consumer price data, expected to ease to 8.1% an annual basis in April, from 8.6% in March, according to a survey of economists from Dow Jones and The Wall Street Journal. U.S. stock futures
were also higher ahead of that data.