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Oil Gains as Market Gripped by Volatility Before Inflation Data

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(Bloomberg) Oil climbed after sliding below $100 a barrel on Tuesday as choppy trading gripped the market before a US inflation print.West Texas Intermediate rose almost 1% on Wednesday after tumbling 7.9% in the previous session to close at a three-month low. US inflation data for June is due Wednesday and economists project that it surged again, keeping the Federal Reserve geared for another big interest-rate hike.

Oil has given up the gains seen in the wake of Russia’s invasion of Ukraine, which drove the US benchmark above $130 a barrel in March. Crude prices pose a high risk to global economic recovery, with signs that fuel costs are starting to “take their toll” on demand growth, according to a monthly report from the International Energy Agency.

Oil claws back some of Tuesday's hefty losses

The market is wrestling with “short-term downward risks due to recession fears, versus the longer-term issues with underinvestments,” said Hans Van Cleef, a senior energy economist at ABN Amro.

Concerns over an economic slowdown have overshadowed tight physical crude markets. OPEC’s first outlook for 2023 suggests that there will be no relief for squeezed consumers, with more oil needed from the group even though most members are already pumping flat out.

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US President Joe Biden has repeatedly called on OPEC to pump more and is scheduled to visit Saudi Arabia this week during a tour of the Middle East. The kingdom along with the United Arab Emirates are the only cartel members with significant volumes of unused production capacity.

  • WTI for August delivery rose 0.8% to $96.61 a barrel at 10:29 a.m. in London after sliding as much as 2.3% earlier.
  • Brent for September settlement gained 0.9% to $100.39.

The American Petroleum Institute reported that US crude stockpiles rose by 4.76 million barrels last week, according to people familiar with the figures. The Energy Information Administration will report data on Wednesday.

China’s exports expanded at a faster pace than expected in June as Covid disruptions continued to ease, though concerns about virus outbreaks remain. Some residents in Shanghai have been urged to stockpile food and medicines as the fear of returning to lockdown hangs over the city.

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