Oil rebounds on China’s plans to support its economy

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HOUSTON, April 26 — Oil prices rebounded in volatile trading on Tuesday as the market weighed China’s plans to bolster its economy against shutdowns in the nation’s capital.

Brent crude futures were up $2.37, or 2.3%, at $104.71 a barrel as of 11:50 a.m. ET (1551 GMT). US West Texas Intermediate contracts rose $2.65, or 2.7%, to $101.21.

Brent and WTI had stabilized around 4% on Monday and touched respective lows of $101.08 and $97.06 a barrel on Tuesday, under pressure from concerns about demand in China, the largest importer of crude oil in the world.

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China’s central bank said on Tuesday it would step up cautious monetary policy support for the country’s economy and any stimulus would help boost demand for oil amid concerns about slowing global growth.

“Oil traders are putting fears of Beijing’s lockdown in the rearview mirror and instead focusing on more stimulus from China,” said Price Futures Group analyst Phil Flynn.

China’s capital of Beijing has expanded mass COVID-19 testing across much of the city of nearly 22 million as people brace for a lockdown similar to Shanghai’s tough restrictions.

In addition to supply problems, the European Union has continued to consider options to reduce Russian oil imports amid possible new sanctions against Moscow following its invasion of Ukraine, but nothing has happened. officially proposed as governments assess their impact.

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Germany has said it hopes to replace all oil deliveries from Russia within days, Economy Minister Robert Habeck said on Tuesday.

Global commodities trader Trafigura Group will halt all crude oil purchases from Russian state oil company Rosneft by May 15, a company spokesman said on Tuesday.

Still, analysts said the release of oil from emergency reserves eased concerns about tight supplies.

Kazakhstan has increased its crude output in the past few days, sources familiar with the data told Reuters, after having to cut it due to a bottleneck in its main export pipeline.

The Caspian Pipeline Consortium’s Black Sea pipeline and terminal, which ships around 80% of Kazakh crude exports, returned to full capacity on Saturday after operating at half capacity for several weeks due to storm-damaged mooring points .

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In a bearish signal for oil markets, five analysts polled by Reuters on average estimated U.S. crude inventories rose 2.2 million barrels in the week to April 22.

The poll was taken ahead of the release of the American Petroleum Institute’s inventory report at 4:30 p.m. EDT (2030 GMT) on Tuesday. Official data from the government’s Energy Information Administration is due out on Wednesday.

“Attention has shifted to the demand side of the equation and concerns over prolonged supply disruptions have been significantly alleviated by the release of 240 million barrels of SPR oil by IEA members and by the ostensible, if somewhat obfuscated, trade in Russian oil,” said Tamas Varga of oil broker PVM.

Valero Energy Corp, the first U.S. refiner to report earnings for the quarter, said it expects product demand to remain healthy. (Additional reporting by Rowena Edwards in London, Mohi Narayan in New Delhi and Liz Hampton in Denver; Editing by Louise Heavens and David Goodman)

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