- Crude rallies after nearly 10% slide over two days
- Hungary digs heels in over EU embargo on Russian oil
- Ukraine halts some Russian gas flows
- Coming up: EIA supply report, 1430 GMT
LONDON, May 11 (Reuters) – Oil rose on Wednesday after plunging nearly 10% in the last two sessions, buoyed by supply concerns as flows of Russian gas to Europe fell and the European Union worked on gaining support for a Russian oil embargo.
Russian gas flows to Europe via Ukraine fell by a quarter on Wednesday after Kyiv halted use of a major transit route blaming interference by occupying Russian forces, the first time exports via Ukraine have been disrupted since the invasion.
Brent crude was up $3.87, or 3.8%, to $106.33 a barrel at 1140 GMT, while U.S. West Texas Intermediate crude climbed $3.97, or 4%, to $103.73.
“I suspect the gas disruptions in Ukraine are having a steadily increasing impact,” said Jeffrey Halley, analyst at brokerage OANDA.
The EU has proposed an embargo on Russian oil, which analysts say would further tighten the market and shift trade flows. A vote, which needs unanimous support, has been delayed as Hungary has dug in its heels in opposition.
Oil also gained on hopes of Chinese economic stimulus after China’s factory-gate inflation eased and investors took comfort in signs of lower domestic COVID-19 infections.
The price of crude has surged in 2022 as the Ukraine invasion added to supply concerns, with Brent reaching $139, the highest since 2008, in March. Worries about growth from China’s COVID curbs and U.S. interest rate hikes have prompted this week’s slump.
A backdrop of tight supply because of what major producers say is partly a result of inadequate investment remains supportive for oil. The United Arab Emirates energy minister highlighted these concerns on Tuesday.
In focus for investors on Wednesday will be U.S. consumer price data at 1230 GMT, which could give an indication of whether the Fed will raise rates even more aggressively to combat inflation.
And on the oil front, the latest U.S. government supply report is due at 1430 GMT. Analysts expect a small drop in crude stocks, although Tuesday’s American Petroleum Institute report said they increased.
Additional reporting by Sonali Paul in Melbourne and Muyu Xu in Beijing; editing by Jason Neely and Louise Heavens