Oil prices steady as supply woes offset recession fears

Oil prices were little changed early on Tuesday as supply worries offset recession fears and China’s commitment to its zero-COVID policy.

Brent crude rose 7 cents, or 0.1%, to $97.99 a barrel by 0155 GMT, while U.S. West Texas Intermediate (WTI) crude rose 7 cents, or 0.1%, to $91.86 a barrel.

Both benchmarks hit their highest since August on Monday amid reports that leaders in China, the world’s top crude importer, were weighing an exit from the country’s strict COVID-19 restrictions.

However, Chinese health officials over the weekend reaffirmed China’s commitment to its strict zero-COVID policy. Also, recent data showed the country’s exports and imports unexpectedly contracted in October.

The near-term fundamentals for oil remain bullish, with the focus returning to supply issues, ANZ Research analysts said.

“The market is facing the deadline for European imports of Russian oil before sanctions kick in,” ANZ added.

The European Union ban on Russian oil, imposed in retaliation for Russia’s invasion of Ukraine, is set to start on Dec. 5 and will be followed by a halt on oil product imports in February.

Market participants will be eyeing the U.S. CPI data this week for trading cues “where sticky inflation may strengthen the Fed‘s hawkish stance and intensify recession fears”, weighing on oil, CMC Markets analyst Tina Teng said.

U.S. crude oil stocks were expected to have risen by about 1.1 million barrels last week, a preliminary Reuters poll showed on Monday.

The poll was conducted ahead of reports from the American Petroleum Institute due at 4:30 p.m. ET (2130 GMT) on Tuesday, and the Energy Information Administration due at 10:30 a.m. (1530 GMT) on Wednesday.