Slight drop in oil prices despite chance of Chinese comeback
Oil prices slide Wednesday morning despite Tuesday’s news of a gradual reopening of Shanghai.
Meanwhile, a new agreement between US oil company Chevron and Venezuela’s national oil producer could contribute to additional oil price pressure, writes Reuters.
A barrel of European reference crude, Brent, costs USD 112.35 Wednesday morning against USD 115.06 Tuesday afternoon. Meanwhile, US counterpart, West Texas Intermediate, trades at the same time for USD 113.31 against USD 114.85 Tuesday afternoon.
Reports show that the US will allow Chevron to negotiate oil licenses with Venezuela’s national oil producer, temporarily lifting a US ban on such talks, writes Reuters.
”The proposed changes could ultimately lead to more crude oil hitting the market,” write analysts of ANZ Research in a client note.
However, there is also a chance that oil demand will increase as China gradually reopens the largest city in the nation, Shanghai, following a six-week lockdown.
According to Reuters, Shanghai reached its long-awaited milestone of no new registered cases of Covid-19 outside quarantine zones for three days straight, leading to Monday’s announcement of an end to lockdown measures as soon as possible.
On top of this, the US is reportedly taking steps to curtail rising inflation, writes Bloomberg News.
Tuesday, Chair of the US Federal Reserve Jerome Powell pledged that the central bank will continue to carry out additional interest rate hikes until there is clear evidence of inflation abating.
Earlier in May, the Federal Reserve hiked up its interest rate by half a percentage point, which also appears to be in the offing in June and July, according to the news agency.
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