NEW YORK (Reuters) – Oil prices rose nearly 5 percent on Wednesday after falling nearly 10 percent in the previous two sessions, buoyed by supply concerns as Russian gas supplies to Europe decline while the European Union works to rally support for a Russian oil embargo.
Russian gas flows to Europe through Ukraine fell by a quarter on Wednesday after Kyiv halted use of a major gas transit point, blaming the intervention of occupying Russian forces. This was the first time that exports through Ukraine had been disrupted since the war.
By 15:43 GMT, Brent crude prices rose $4.59 to $107.05 a barrel.
US West Texas Intermediate crude reached $104.78 a barrel, up $5.02.
“I think the gas disruptions in Ukraine are having a steadily increasing effect,” said Jeffrey Haley, an analyst at brokerage Wanda.
The European Union has proposed a ban on Russian oil imports, which analysts say would worsen supply shortages to the market and alter trade trends. The vote, which must be unanimous, has been postponed as Hungary sticks to its position against the ban.
The US Energy Information Administration said that crude stocks in the United States rose by more than eight million barrels in the last week, due to the withdrawal of new large quantities of strategic reserves. Commercial crude stocks are increasing after the White House chose to pump oil into the market to counter the rising prices.
However, fuel prices continued to rise as refining capacity decreased and demand for products increased worldwide – while Russian exports contracted. Despite the increase in crude stocks, gasoline stocks fell by 3.6 million barrels in the last week.
The price of oil was also supported by optimism about the Chinese economy, after the inflation of commodity costs fell at the gates of factories in China, with investors relieved by evidence of a decline in domestic infections with Covid-19, and oil also received support from the disruption of Russian gas supplies.
Oil prices rose in 2022 after the Russian war in Ukraine heightened supply concerns, with Brent price reaching $139 a barrel in March, its highest level since 2008. Concerns about economic growth in China were due to restrictions to contain Covid-19 and raise US interest rates. Behind the decline in oil prices this week.
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