By Alex Lawler
LONDON (Reuters) – Oil edged up on Wednesday after Brent crude earlier fell close to its lowest in 2022, as hopes of higher Chinese demand and concern about Russian supply arising from tanker delays in Turkish waters offset recession fears.
China announced on Wednesday the most sweeping changes to its anti-COVID regime since the pandemic began, while RIA cited Russia’s deputy foreign minister as saying Russia was concerned about a build-up of oil tankers in the Bosphorus Strait.
Brent crude was up 20 cents, or 0.3%, at $79.55 a barrel by 1300 GMT. It touched $77.74 earlier, the lowest since Jan. 3. U.S. crude added 22 cents, or 0.3%, to $74.47 and earlier touched $72.75, the lowest since late December.
“If confidence in uninterrupted Russian oil supply has played any part in the recent weakness, it was probably misplaced. Tankers getting delayed in Turkish waters is a prime example of that,” Tamas Varga of oil broker PVM said.
At least 20 oil tankers queuing off Turkey face more delays to cross from Russia’s Black Sea ports to the Mediterranean as operators race to adhere to new Turkish insurance rules added ahead of a G7 price cap on Russian oil, industry sources said on Tuesday.
“The easing of Chinese COVID restrictions and the jump in the country’s crude oil imports in November are also seen as supportive factors,” Varga added.
Still, warnings from big U.S. banks about a likely recession next year weighed.
Brent settled below $80 on Tuesday for only the second time in 2022 and has unwound the year’s gains, which had lifted prices close to the all-time high of $147 in March after Russia invaded Ukraine.
Russia, the Vedomosti daily reported on Wednesday, is considering options including banning oil sales to some countries to counter the price cap imposed by Western powers.
“There’s still tons of uncertainty in the markets today,” said Claudio Galimberti, senior vice-president at Rystad Energy, adding crude production in Russia may not drop as much as expected earlier.
Also lending support was Tuesday’s report from industry group the American Petroleum Institute which, according to market sources, said that crude stocks fell by around 6.4 million barrels.
In focus is the latest U.S. supply report from the Energy Information Administration due at 1530 GMT and whether it confirms the large decline in crude stocks. [EIA/S]
(Additional reporting Trixie Yap in Singapore, editing by Jason Neely and Louise Heavens)
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