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Despite a tight physical oil market, investors have sold oil
futures on worries that aggressive rate hikes to stem inflation
will slow economic growth and hit oil demand. Prices fell by
more than 7% on Tuesday in volatile trade.
Brent crude was up 73 cents, or 0.7%, at $100.22 a barrel at
0813 GMT. U.S. West Texas Intermediate crude gained 68 cents, or
0.7%, to $96.52.
"Although I don't rule out more downside surprises, I believe
the recent selloff could be getting a little overdone," said
Jeffrey Halley of brokerage OANDA.
Brent is down sharply since hitting $139 in March, close to the
all-time high reached in 2008. Renewed COVID-19 curbs in China
have weighed on the market this week.
"The worry is that this could lead to a lockdown," said Naeem
Aslam at Avatrade of the Chinese COVID developments. "In
addition to this, traders are worried about economic slowdown
around the globe."
On investors' radar on Wednesday is the U.S. June consumer
prices data, which economists expect to show that U.S. inflation
has accelerated to 1.1% monthly and 8.8% annually.
And for the oil market, the latest U.S. supply report from the
Energy Information Administration will be in focus. Analysts
expect a decline in crude and gasoline inventories. [EIA/S]
Still, according to figures from industry group the American
Petroleum Institute, cited by sources on Tuesday, crude stocks
rose about 4.8 million barrels, weighing on prices.
The market also is watching U.S President Joe Biden's visit to
the Middle East, where he is expected to ask Saudi Arabia and
other Gulf producers to raise oil output to help stabilise
prices.
(Additional reporting by Muyu Xu; Editing by Angus MacSwan)
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