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LONDON (Reuters) -Oil rose on Tuesday, recovering earlier losses, as tight global supply and an expected pick-up in fuel demand during the U.S. summer driving season balanced concerns over a possible recession and China’s COVID-19 curbs.
In a step that analysts say will further tighten the market, the European Union is moving closer to agreeing a ban on Russian oil imports. Such an embargo is likely to be agreed “within days”, Germany’s economy minister said on Monday.
Another source of support is U.S. gasoline demand. U.S. Memorial Day weekend travel is expected to be the busiest in two years as more drivers hit the road and shake off coronavirus lockdowns despite high pump prices.
“The oil market remains caught between fears of recession and the consequences of the zero-COVID policy in China on the one hand, and tight supply, especially of oil products,” Commerzbank analyst Carsten Fritsch said in a report.
Brent crude rose 44 cents, or 0.4%, to $113.86 a barrel by 1110 GMT. U.S. West Texas Intermediate (WTI) crude added 36 cents, or 0.3%, to $110.65.
Oil has surged this year, with Brent crude hitting $139 a barrel in March for its highest since 2008 after Russia’s invasion of Ukraine exacerbated supply concerns.
Even so, worries about threats to the global economy - a main theme of the Davos meeting taking place this week - limited gains and were behind price falls earlier on Tuesday.
“Global economic growth is declining precipitously under the collective impact of rising interest rates, Chinese COVID flare-ups and the European war,” said Tamas Varga of oil broker PVM.
Beijing is stepping up quarantine efforts to end its month-old outbreak while Shanghai’s prolonged lockdown is due to be lifted in a little more than a week.
Weekly U.S. inventory reports will be in focus later for a read on the strength of demand. Analysts expect gasoline and crude inventories to drop. The first report is from the American Petroleum Institute at 2030 GMT. [EIA/S]
Reporting by Alex LawlerAdditional reporting by Yuka Obayashi and Isabel KuaEditing by David Goodman
