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Brent crude futures were up $1.01, or 0.8%, at $121.58 a barrel
at 0927 GMT. U.S. West Texas Intermediate crude was at $120.62 a
barrel, up $1.21, or 1%.
"Despite the API report showing builds for crude and oil
products, oil prices are higher, supported by expectation of
China easing the COVID restrictions, translating in higher
demand and imports this summer," UBS analyst Giovanni Staunovo
said.
A number of Norwegian oil workers plan to strike from June 12
over pay, putting some crude output at risk of shutdown.
Market sources said American Petroleum Institute figures on
Tuesday showed U.S. crude stocks rose by 1.8 million barrels for
the week ended June 3. Gasoline and distillate inventories rose
by 1.8 million barrels and 3.4 million barrels, respectively.
The U.S. Energy Information Administration (EIA) will report
last week's stock levels at 1030 a.m. EDT (1430 GMT) on
Wednesday.
The World Bank on Tuesday slashed its global growth forecast for
2022 by nearly a third, warning Russia's invasion of Ukraine had
compounded damage from the COVID-19 pandemic, and that many
countries now faced recession.
Meanwhile, global crude and oil product supplies remain tight,
boosting Asian refiners' diesel margins to record levels, as
Western sanctions hamper exports from major producer Russia.
The CEO of global commodities trader Trafigura said oil prices
could soon hit $150 a barrel and go higher this year, with
demand destruction likely by the end of the year.
Most refineries globally are already running close to capacity
to meet rising demand from the pandemic recovery and to replace
lost Russian supplies.
JP Morgan analysts estimate Russia has cut about 500,000 to
700,000 barrels per day of oil product exports, because it now
finds marketing fuel harder than marketing crude.
"Unless new Middle East capacity comes online more quickly than
we expect or China decides to lift its products export caps, the
shortage of clean products will only get worse as demand for
transport fuels picks up during the northern hemisphere summer,"
they said in a note.
On Tuesday, China topped up its first batch of product export
quotas aimed at reducing high domestic inventories, which have
risen as pandemic lockdowns have dented demand. Despite the
latest additions to the quotas, their volumes remain much lower
than last year, however.
(Additional reporting by Florence Tan and Muyu Xu in
SingaporeEditing by Mark Potter)
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