oil from tight supply; Tadka on Demand Business Concerns

Brent crude was up 26 cents at $122.27 a barrel. US West Texas Intermediate crude was up 26 cents at $120.93 a barrel. Trade was volatile, with prices having previously fallen by about $3 a barrel.

Oil prices rose on Monday in a session of volatile trading as tight global supplies raised concerns that a flare-up in COVID-19 cases in Beijing and higher interest rate hikes would put pressure on demand.

Brent crude was up 26 cents at $122.27 a barrel. US West Texas Intermediate crude was up 26 cents at $120.93 a barrel. Trade was volatile, with prices having previously fallen by about $3 a barrel.

Oil supplies are tight, OPEC and allies unable to fully increase production due to a lack of capacity at many producers, sanctions on Russia, and unrest in Libya.

Oil rose in 2022 as Russia’s February invasion of Ukraine raised supply concerns and as demand recovered from lockdowns related to the COVID-19 pandemic. In March, Brent hit $139, the highest since 2008. Last week, both oil benchmarks rose over 1%.

“We were dealing with Russian losses (of oil), so now let’s add an exclamation point to the situation in Libya,” said Robert Yoger, executive director of Energy Futures at Mizuho.

On Saturday, the average price of US gasoline exceeded $5 per gallon for the first time, AAA data showed.

Faced with demand concerns, Chaoyang, Beijing’s most populous district, announced three rounds of mass testing to contain the “brutal” COVID-19 outbreak.

“We don’t know what’s going to happen to China. The mood is bad right now,” said Phil Flynn, analyst at Price Futures.

Concerns about further rate hikes, fueled by Friday’s US inflation data, pushed the consumer price index up 8.6% last month, leaving oil lower. [MKTS/GLOB]

Other financial markets also fell, as investors worried that the Federal Reserve might tighten policy too aggressively and cause a sharp economic slowdown. The S&P 500 was on track to confirm a bear market. The next Fed policy decision is on Wednesday.

In Europe, Francesco Giavazzi, the closest economic adviser to Italian Prime Minister Mario Draghi, said on Monday that raising the European Central Bank’s interest rates was not the right way to curb rising prices.

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