Oil rebounds from two days of losses in volatile trade

Reuters

Published May 18, 2022 22:38

Updated May 19, 2022 15:09

By David Gaffen

NEW YORK (Reuters) -Oil prices rebounded from two days of losses in a volatile session on Thursday, bolstered by weakness in the dollar and expectations that China could ease some lockdown restrictions that could boost demand.

Crude benchmarks continued their spate of wild swings, with both Brent and U.S. crude rising by nearly $5 a barrel in the span of a few hours, recovering from losses earlier in the week.

"The market has been extremely volatile," said Andrew Lipow, president of Lipow Oil Associates in Houston. "The market is reacting to all sorts of different headlines hour to hour, and the movement in oil markets on a day-by-day basis getting even more exaggerated."

Brent crude futures for July settled at $112.04, a gain of $2.93 a barrel, or 2.7%. U.S. West Texas Intermediate (WTI) crude futures for June settled up $2.62, or 2.4%, to $112.21 a barrel.

In China, investors are closely watching plans to ease coronavirus curbs from June 1 in the most populous city of Shanghai, which could lead to a rebound in oil demand from the world's top crude importer.

Oil markets also rebounded as the dollar weakened. The broad dollar index was down 1% on the day after recent gains. Oil benchmarks often move inversely to the dollar as most global crude transactions are handled in dollars, so a rising greenback makes crude more expensive for big importers.

Crude gains have been limited, however, with the Brent and U.S. benchmarks trading in a range due to the uncertain path of demand. Investors, worried about rising inflation and more aggressive action from central banks, have been reducing exposure to riskier assets.

"Brent seems pinned above $100 but I think the recession risk and all of the concerns about Chinese demand are limiting the upside and will continue to do that," said Bill Farren-Price, head of oil and gas macro research at Enverus in London.