Oil recovers from early losses on tight global supplies

On Thursday, oil prices recovered from early losses, as lingering fears over tight global supplies outweighed fears of slower economic growth, highlighted by slumping global shares.

Brent crude futures for July were up 97 cents, or 0.9%, at $110.08 a barrel at 0220 GMT, after falling by more than $1 earlier in the session.

The U.S. West Texas Intermediate WTI crude futures rose 42 cents, or 0.4%, to $110.01 a barrel, recovering from an early loss of more than $2. The WTI for July was up 56 cents, or 0.5%, at $107.60 a barrel.

Both benchmark prices fell by 2.5% on Wednesday.

Satoru Yoshida, a commodity analyst with Rakuten Securities said that Wall Street slumped sentiment in early trade as it highlighted concerns over weakening consumption and fuel demand. MKTS GLOB Asian stocks on Thursday followed a steep Wall Street selloff as investors fretted about rising global inflation, China's zero-COVID policy and Ukraine war. Yoshida said the European Union is expected to tighten global supply due to a pending import ban on Russian crude.

The European Union proposed a new package of sanctions against Russia for its invasion of Ukraine this month. This would include a total ban on oil imports in six months, but the measures have not yet been adopted, with Hungary being one of the most vocal critics of the plan.

The European Commission has unveiled a 210 billion euro $220 billion plan for Europe to end its dependence on Russian fossil fuels by 2027, and to pivot away from Moscow to speed up its transition to green energy.

The U.S. crude inventories fell last week, an unexpected drawdown, as refiners ramped up output in response to tight product inventories and near-record exports that have forced U.S. diesel and gasoline prices to record levels. EIA S Capacity use on both the East Coast and Gulf Coast was above 95%, putting the refineries close to their highest possible running rates.