Oil prices rise more than $1 a barrel as China eases COVID restrictions

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Oil prices rise more than $1 a barrel as China eases COVID restrictions

SINGAPORE Reuters -- Oil prices rose more than $1 a barrel in early Asian trade on Wednesday, as the country gradually eases off some of its strict COVID 19 containment measures.

Brent crude futures rose $1.15, or 1.0%, at $113.08 a barrel at 0042 GMT, while U.S. West Texas Intermediate WTI crude futures climbed $1.62, or 1.4%, to $114.02 a barrel, paring some losses after oil prices fell by around 2% in the previous session.

Shanghai set out plans on Monday for ending a lockdown that has lasted for more than six weeks after reaching a three day milestone with no new COVID 19 cases outside quarantine zones on Tuesday.

In a client note, SPI Asset Management managing director Stephen Innes said that the news on China has had a nip in the tail which is positive for producers but harmful for consumer sentiment beyond the near term.

The American Petroleum Institute figures showed that the U.S. crude and gasoline stocks fell last week, market sources said. The U.S. government data is due on Wednesday. Russia's production fell by nearly 9% in April, and the country was part of the OPEC group of oil-producing nations, far below the levels required under a deal to ease record output cuts during the worst of the coronaviruses epidemic in 2020.

Analysts from ANZ Research said on Wednesday that there is still pressure on prices due to reports that the United States is allowing Chevron Corp to negotiate oil licences with Venezuela's national producer, temporarily lifting a U.S. ban on such discussions.

The proposed changes could lead to more crude oil hitting the market. The European Union's failure to persuade Hungary to lift its veto on a proposed embargo of Russian oil was further weighing on the market. Some diplomats point to a May 30 -- 31 summit as the moment for an agreement on a phased ban.

In the United States, Federal Reserve Chairman Jerome Powell pledged on Tuesday that the central bank would ratchet up interest rates as high as needed to stifle a surge in inflation that he said threatened the foundation of the economy.