February 8, 2023

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Oil rebounds from 2022 lows on demand hopes in China and tanker delays By Reuters

©Reuters. FILE PHOTO: A view shows the Chao Xing tanker at the Kozmino crude oil terminal on the shore of Nakhodka Bay near the port city of Nakhodka, Russia, August 12, 2022. REUTERS/Tatiana Meel/File Photo

By Alex Lawler

LONDON (Reuters) – Oil rebounded on Thursday after four bearish sessions, bolstered by hopes that China’s easing of anti-COVID measures will revive demand and signs that some tankers carrying Russian oil will start trading after a G7 price cap were delayed.

China on Wednesday announced the most sweeping changes to its resolute anti-COVID regime since the pandemic began, while at least 20 oil tankers faced delays crossing from Russia’s Black Sea ports to the Mediterranean Sea.

was up 27 cents, or 0.4%, to $77.44 a barrel by 1120 GMT, while US West Texas Intermediate (WTI) crude was up 49 cents, or 0.7%, to $72.50.

“Today we’re seeing some green price action,” said Naeem Aslam, an analyst at Avatrade. “Prices are oversold due to the intense sell-off of the past few days. However, the price action is still not showing a strong bullish bias.”

The 14-day relative strength index for Brent was below 30 on Thursday, according to Eikon data, a level taken by technical analysts as an indication that an asset is oversold and could be primed for a recovery.

Both Brent and Brent hit 2022 lows on Wednesday, erasing any gains made after Russia’s invasion of Ukraine exacerbated the worst global energy supply crisis in decades and sent oil near its all-time high of $147.

Western officials are in talks with Turkish counterparts to resolve tanker queues, a UK Treasury official said on Wednesday, after the G7 and the European Union introduced new restrictions on Russian oil exports on December 5.

The queues indicate that “the available supply from the Black Sea is already affected by the punitive measure,” said Tamas Varga of oil brokerage PVM.

“In a healthy economic climate, such a move would be tantamount to starting the race back to $100.”

Concerns about an economic slowdown, weaker fuel demand and the prospect of further rate hikes in the United States weighed on performance. The Federal Reserve is widely expected to hike interest rates by 50 basis points next week.

While US crude stocks fell last week, stocks of gasoline and distillates rose, adding to concerns about weakening demand. [EIA/S]