Meanwhile, Germany is days away from ridding itself entirely of Russia imports: File Image/Pixabay
Less than 24 hours after jittery traders decided that China's Covid lockdowns could cause demand destruction and sent oil prices plummeting, on Tuesday they were appeased by that country's central bank assuring that economic support would be provided – and boosted prices with equal vigour.
After China's central bank pledged to ensure ample liquidity and assist sectors battered by the lockdowns, West Texas Intermediate settled up $3.16 at $101.70 per barrel and Brent settled up $2.67 to $104.99.
Edward Moya, senior market analyst at OANDA, said in a note, "A rebound with risk appetite and overdone concerns about demand destruction helped oil pare losses."
Edward Moya, senior market analyst, OANDA
Supply fears are not the primary focus for energy traders
Moya added, "Supply fears are not the primary focus for energy traders and now you have a surging dollar that is adding extra pressure across all commodities.
"The oil market could easily become very tight if China shows they are close to reversing their stance on lockdowns, but right now that doesn't seem to be happening anytime soon."
Also on Tuesday, NYMEX ultra-low-sulfur diesel futures rose 9.2 percent to settle at $4.47 per gallon, a record close due to Poland disclosing that Russia warned that gas supply would stop on Wednesday.
Scott Shelton, energy specialist at United ICAP, said, "Russia demanding payment in Rubles from Poland is likely to result in a halt in gas supplies and will also contribute to even stronger diesel prices."
As for possible influence on oil trading in the near future, Robert Habeck, economy minister for Germany, said his country has already cut its reliance on Russian oil enough to make a full embargo "manageable" – which means it could lay the groundwork for a continent-wide ban on Russia as punishment for its invasion of Ukraine.
Habeck said, "The problem that seemed very large for Germany only a few weeks ago has become much smaller," and he added that replacing the Russian oil feeding the Schwedt refinery in northeastern Germany - which is part-owned by Rosneft and accounts for the remaining 12 percent of Russian oil imports - could be achieved "in a matter of days."