Oil prices turned lower during morning trading on Wednesday despite simmering geopolitical tensions as Russia cut gas supplies to Poland, while hopes of Chinese economic stimulus buoyed the demand outlook.
Brent crude futures slid 45 cents, or 0.4%, to $104.54 U.S. per barrel. U.S. West Texas Intermediate crude futures declined 61 cents, or 0.6%, to $101.09.
Russia halted gas supplies to Poland on Wednesday, in a major escalation of Russia’s broader row with the West over its invasion of Ukraine, which Moscow calls a “military operation”.
The International Monetary Fund warned on Tuesday that Asia faces a “stagflationary” outlook with the Ukraine war, a spike in commodity costs and a slowdown in China creating significant uncertainty.
China’s central bank said on Tuesday it will step up prudent monetary policy support to its economy as Beijing races to stamp out a nascent COVID-19 outbreak in the capital and avert the same debilitating city-wide lockdown that has shrouded Shanghai for a month. Any stimulus would boost oil demand.
In matters of supply, U.S. government data on crude inventories is due later on Wednesday. Industry data on Tuesday showed U.S. crude and distillate stocks rose last week while gasoline inventories fell.
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