Oil see-saws as traders worry about supply

New Delhi/Melbourne — Oil prices see-sawed on Tuesday as investors fretted over tight global supply after Libya halted some exports and as factories in Shanghai prepared to reopen post a Covid-19 shutdown, easing some demand worries.

Brent crude was down 26c, or 0.23%, to $112.90 a barrel at 6.43am GMT, after rising more than $1 to $114.21 earlier in the session.

US West Texas Intermediate crude fell 45c, or 0.42%, to $107.76 a barrel, after rising to $108.92 earlier.

Prices came under pressure with the dollar trading at a fresh two-year high. A firmer greenback makes commodities priced in dollars more expensive for holders of other currencies.

Both benchmarks rose more than 1% on Monday after hitting their highest since March 28 on political crisis in Libya. The country said it could not deliver oil from its biggest oilfield and shut another field due to political protests.

The latest supply hit came just as fuel demand in China, the world’s largest oil importer, was expected to pick up as manufacturing plants prepared to reopen in Shanghai.

Oil prices, however, are still vulnerable to demand shocks as China continues to impose tough Covid-related curbs.

“For oil prices to take off on a sustainable trajectory, reopening mainland cities is necessary for translating into a sustainable economic rebound that supports oil demand,” said SPI Asset Management MD Stephen Innes.

Oanda analyst Jeffrey Halley noted that markets in Asia seemed content to adopt a wait-and-see approach, reluctant to chase rallying prices any higher.

“China’s growth concerns are capping gains,” Halley said.

In the US, crude inventories rose by 9.4-million barrels in the week to April 8 to 421.8-million barrels, against analysts’ hopes for an 863,000-barrel rise, a preliminary Reuters poll showed.

The possibility of a EU ban on Russian oil for its invasion of Ukraine continues to keep the market on edge.

Russian forces have launched their anticipated offensive in eastern Ukraine, attempting to push through defences along almost the entire front line in what Ukrainian officials described as the second phase of the war.

Reuters