Meanwhile, India gets much less that it bargained for with Russian oil purchases: File Image/Pixabay
Demand concerns eased somewhat on Tuesday with China relaxing some of its Covid lockdown measures, and that combined with Russia vowing to continue its invasion of Ukraine caused oil prices to return to about $100 per barrel.
West Texas Intermediate settled up $6.31 at $100.60 and Brent settled up $6.16 to $104.64 per barrel after Russian president Vladimir Putin said peace talks with Ukraine are "at a dead end" and reiterated that invasion of that country is necessary.
Traders were also heartened by Shanghai easing lockdowns for some housing complexes, even though most people remained confined to their homes and the government threatened to restore restrictions if infections climb.
Ed Moya, senior market analyst, Oanda Corp
The crude correction appears to be over
Ed Moya, senior market analyst at Oanda Corp, remarked, "The crude correction appears to be over as China begins to lift some of their lockdowns.
"The energy market has now mostly priced in the coordinated strategic petroleum release and probably was overly pessimistic on how far China would stick to their strict lockdown and isolation measures."
But mixed messages about demand persisted in media circles on Tuesday: on one hand, Bloomberg noted that U.S. crude for immediate delivery this week sank to trade just 30 cents above the next month, after trading as high as $5.26 per barrel last month - a sign of waning demand.
On the other, the Energy Information Administration stated that U.S. drivers are expected to consume 9.2 million barrels per day (bpd) of gasoline from April to September, up by 0.8 percent from the same time last year, and even with higher prices limiting some travel.
Mixed messages about oil supplies are equally prevalent: while most analysts worry that output globally is not enough to make up for expected shortfalls (especially with the sanctions against Russia), Bloomberg on Tuesday stated that the emergency oil supplies set to hit the U.S. starting in May "threatens to turn the market on its head, going from severely under supplied to oversupplied in a matter of months."
Also, Tamas Varga, an analyst at PVM Oil Associates Ltd., said with relation to the oil futures curve, "The coordinated and unprecedented SPR release puts pressure on the front-end; clearly, there is a yawning gap in the views of traders and researchers or analysts…..the former has turned undoubtedly bearish."
In other oil related news on Tuesday, India – one of the few remaining eager buyers of Russian crude – is not getting the bargain it had expected in dealing with the former Soviet Union.
Reportedly, processors recently bought millions of barrels of Urals crude via open tenders, with some supplies going at a premium of $1 per barrel to London's Dated Brent benchmark on a delivered basis compared with discounts of over $30 per barrel for the same grade in Europe.