Oil Prices Rise in Asia as Supply Tightens

By Gina Lee

Oil prices experienced an increase on Wednesday morning in Asia as investors weighed the tight supply of gasoline against concerns about potential economic slowdowns and ongoing lockdowns in China.

Prices rose by $1.26, or 1.14%, reaching $111.95 per barrel as of 1:28 AM ET, while another benchmark was up by 1.22%, at $111.11.

Recent data indicated that oil inventories in the U.S. increased last week, while gasoline stocks saw a decline. Crude oil inventories rose by 567,000 barrels for the week ending May 10, marking an unexpected increase that contrasted with a larger draw of 2.4 million barrels the previous week. Analysts had anticipated a decrease of 690,000 barrels.

On the other hand, gasoline inventories dropped by 4.2 million barrels, raising concerns about rising gas prices and their potential impact on inflation. The decline in gasoline stocks is particularly troubling as the U.S. enters the busy summer driving season.

Additionally, distillate stocks fell by 949,000 barrels.

A report is expected later in the day.

In China, Shanghai is slowly progressing towards reopening as it continues to tackle a month-long COVID outbreak.

This week, the International Energy Agency (IEA) cautioned that prices are likely to keep rising unless demand from China remains subdued in the coming months. Reports indicate that oil demand in China fell by 11.5% year-over-year in April. However, this situation could change if lockdowns in various cities begin to ease.