Oil prices rise despite rising inventories in the United States

LONDON — Oil prices rose on Wednesday, despite a likely rise in U.S. oil inventories, due to the easing of Chinese COVID-19 lockdowns and a possible strike by Norwegian oil workers.

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 API report showing builds for crude and petroleum products, oil prices are higher, supported by expectation that China will ease COVID restrictions, translating into higher demand and imports this summer,” said UBS analyst Giovanni Staunovo.

A number of Norwegian oil workers are planning to strike from June 12 over their pay, putting some crude oil production at risk of shutting down.

The US Energy Information Agency (EIA) will release last week’s inventory levels at 10:30 a.m. EDT (2:30 p.m. GMT) on Wednesday.

The World Bank on Tuesday slashed its 2022 global growth forecast by almost a third, warning that Russia’s invasion of Ukraine had worsened the damage of the COVID-19 pandemic and that many countries were now facing recession.

Meanwhile, global supplies of crude and petroleum products remain tight, pushing Asian refiners’ diesel margins to record highs, as Western sanctions hamper exports from Russia’s top producer.

The CEO of global commodities trader Trafigura said oil prices could soon hit $150 a barrel and rise this year, with demand destruction likely by the end of the year.

Most of the world’s refineries are already operating near capacity to meet growing demand from the pandemic recovery and to replace lost Russian supplies.

JP Morgan analysts estimate that Russia has cut around 500,000 to 700,000 barrels per day of its petroleum product exports as it now finds it harder to market fuel than to sell crude.

On Tuesday, China increased its first batch of commodity export quotas aimed at reducing high domestic stocks, which have risen as pandemic shutdowns weighed on demand. Despite the latest additions to the quotas, however, their volumes remain well below those of last year.

By Ahmad Ghaddar