Oil edged up on Wednesday, a day after settling below $100 a barrel for the first time since April, and gains were limited by a US supply report showing rising inventories and caution ahead of US inflation data.
Despite a tight physical oil market, investors have sold oil futures on worries that aggressive rate hikes to stem inflation will slow economic growth and hit oil demand.
Prices fell by more than 7% on Tuesday in volatile trade.
Brent crude was up 73 cents, or 0.7%, at $100.22 a barrel at 0813 GMT. US West Texas Intermediate crude gained 68 cents, or 0.7%, to $96.52.
“Although I don’t rule out more downside surprises, I believe the recent selloff could be getting a little overdone,” said Jeffrey Halley of brokerage OANDA.
Brent is down sharply since hitting $139 in March, close to the all-time high reached in 2008. Renewed Covid-19 curbs in China have weighed on the market this week.
“The worry is that this could lead to a lockdown,” said Naeem Aslam at Avatrade of the Chinese Covid developments. “In addition to this, traders are worried about economic slowdown around the globe.”
On investors’ radar on Wednesday is the US June consumer prices data, which economists expect to show that US inflation has accelerated to 1.1% monthly and 8.8% annually.
And for the oil market, the latest US supply report from the Energy Information Administration will be in focus. Analysts expect a decline in crude and gasoline inventories.
Still, according to figures from industry group the American Petroleum Institute, cited by sources on Tuesday, crude stocks rose about 4.8 million barrels, weighing on prices.
The market also is watching US President Joe Biden’s visit to the Middle East, where he is expected to ask Saudi Arabia and other Gulf producers to raise oil output to help stabilise prices.