By Gina Lee
Investing.com – Oil was up on Wednesday morning in Asia. Investors digested Russian threats of gas supply cuts to Poland and Bulgaria, while hopes that China will roll out more economic stimuli supported the oil demand outlook.
Brent oil futures rose 0.33% to $104.95 by 12:20 AM ET (4:20 AM GMT) and WTI futures edged up 0.14% to $101.84. Crude prices settled about 3% higher on Tuesday in volatile trading, with the market torn between supply and demand concerns as Russian oil and gas supplies are disrupted and the global economic outlook worsens.
Russia’s Gazprom (MCX:GAZP) informed Poland and Bulgaria it will halt gas supplies from Wednesday onwards, in the country’s latest reaction to Western sanctions over its invasion of Ukraine on Feb. 24. The news saw NYMEX ultra-low-sulfur diesel futures soar more than 9% on Tuesday to settle at a record close of $4.47 a gallon.
“Oil is supported via the escalation of geopolitical tensions,” Stephen Innes of SPI Asset Management said in a note.
“Cutting gas flows is not new news, but it’s the timing of Russia plugging the gas flows when stagflationary fears are running rampant again.”
The International Monetary Fund warned on Tuesday that Asia faces a ‘stagflationary’ outlook, with the war in Ukraine, high commodity costs, and an economic slowdown in China leading to significant uncertainty.
The People’s Bank of China said on Tuesday it will step up prudent monetary policy support for the economy amid record numbers of COVID-19 cases in Beijing. However, despite the COVID-19 lockdowns in cities including Shanghai, China’s domestic flight demand has rebounded and pushed global airline capacity to its highest level in 2022 in the week to date, travel data firm OAG said on Tuesday.
Meanwhile, Tuesday’s U.S. crude oil supply data from the American Petroleum Institute showed a build of 4.780 million barrels for the week ended Apr. 21. Forecasts prepared by Investing.com predicted a build of 2.167 million barrels, while a 4.496-million-barrel draw was recorded during the previous week.
Investors now await crude oil supply data from the U.S. Energy Information Administration, due later in the day.