Oil prices increased on Wednesday on solid demand hopes in the US due to the upcoming summer driving season, while concerns over China’s strict pandemic policy suppressing demand continues to exert downward pressure on prices.
International benchmark Brent crude was trading at $111.56 per barrel at 0702 GMT for a 0.78% decrease after closing the previous session at $110.69 a barrel.
American benchmark West Texas Intermediate (WTI) was at $110.69 per barrel at the same time for a 0.84% loss after the previous session closed at $109.77 a barrel.
Tight supply concerns and robust demand hopes in the US, the world’s largest oil consumer, with the forthcoming summer driving season supported the price upticks.
The Memorial Day weekend, which falls on May 30 in the US, marks the start of the country’s summer driving season, raising hopes of increased demand in the country.
Auto club AAA predicts the 2022 driving season in the country will be a busy one this year, with expectations that 39.2 million people will travel 50 miles or more from home this Memorial Day weekend.
“This is an increase of 8.3% over 2021, bringing travel volumes almost in line with those in 2017,” the AAA said, pointing to a similar rebound in air travel with a forecast rise of 25% over last year, the second-largest increase since 2010.
Concerns over weaker demand in China as Beijing strengthens mitigation measures in line with its “zero-COVID policy” dented hopes of a demand rebound.
Demand recovery hopes were also diminished after the American Petroleum Institute (API) predicted late Tuesday a rise in US crude oil stockpiles of 567,000 barrels, compared to the market expectation of a drop of 690,000 barrels.
A significant drop in inventories indicates an increase in crude demand in the US, the world’s largest oil consumer, assuaging market concerns over dwindling demand.
Source: Anadolu Agency