Oil Prices Rise Amid Ongoing Economic Growth Concerns

By Gina Lee

Oil prices rose on Thursday morning in Asia as concerns regarding tight global supplies overshadowed fears of slower economic growth. Prices jumped 1.45% to $110.69 at 12:58 AM ET, after experiencing a drop of more than $1 earlier in the session. Similarly, prices for another benchmark rose 1.07% to $108.18, recovering from an earlier loss exceeding $2, and were trading up 56 cents, or 0.5%, at $107.60 per barrel for July delivery.

Both Brent and WTI benchmarks had fallen about 2.5% the day before.

Satoru Yoshida, a commodity analyst at Rakuten Securities, noted that a slump in Wall Street had dampened sentiment in early trading, highlighting concerns over reduced consumption and fuel demand. Asian stocks on Thursday mirrored the steep selloff in the U.S., with rising global inflation, China’s strict zero-COVID policy, and the ongoing conflict in Ukraine triggering fears of an economic recession.

Despite these factors, Yoshida remarked that the oil markets were maintaining a bullish trend, as a proposed import ban by the European Union on Russian crude oil is expected to further tighten global supply. Earlier in the month, the EU suggested a new package of sanctions against Russia following its invasion of Ukraine, which includes a total ban on Russian oil imports in six months. However, the measures have yet to be officially adopted due to resistance from some member countries, including Hungary.

On Wednesday, the European Commission introduced a €210 billion plan aimed at helping Europe reduce its dependence on Russian fossil fuels by 2027.

Additionally, recent reports indicated a draw of 3.394 million barrels for the week ending May 13, contrasting with forecasts that anticipated a build of 1.383 million barrels. This follows an 8.487-million-barrel build reported in the previous week. Another report disclosed a draw of 2.445 million barrels, with capacity utilization in refineries on both the East Coast and Gulf Coast exceeding 95%, indicating operations at near maximum levels.