Oil Prices Steady as Russia Supply Fears Meet Asian Demand Concerns

OIL PRICE - LONDON. Oil was broadly steady on Wednesday after Russia cut gas supplies to Bulgaria and Poland, although lingering concerns about Asian coronavirus lockdowns weighing on economic growth and oil demand kept a lid on prices.

Having dipped into negative territory, Brent crude futures rose 26 cents, or 0.3%, to $105.25 a barrel by 0823 GMT. U.S. West Texas Intermediate crude futures gained 10 cents, or 0.1%, to $101.80 a barrel.

Oil prices shrugged off the dollar rising to its highest in two years, making oil purchases more expensive for holders of other currencies.

Russian energy giant Gazprom said on Wednesday it halted gas supplies to Bulgaria and Poland in a major escalation of Russia's broader row with the West over its actions in Ukraine, which Moscow calls a "military operation".

The row sent NYMEX ultra-low-sulfur diesel futures up more than 9% on Tuesday to $4.47 a gallon, a record close.

The International Monetary Fund (IMF) warned on Tuesday that Asia faces a "stagflationary" outlook with the Ukraine war, a spike in commodity costs and a slowdown in China.

China's central bank said on Tuesday it would step up monetary policy support as Beijing races to stamp out a nascent COVID-19 outbreak in the capital and avert the same type of debilitating city-wide lockdown Shanghai has been under for a month. Any stimulus would boost oil demand.

"This bearish narrative is not expected to last," PVM analyst Stephen Brennock said of global economic slowdown fears on the back of Chinese lockdowns. "The fact is that the impact of lower Russian production has yet to be felt in full, and when it does, it could send oil prices soaring."

China's domestic flight demand has rebounded, travel data firm OAG said.

U.S. government data on oil inventories is due later on Wednesday. Industry data on Tuesday showed U.S. crude and distillate stocks rose last week while gasoline inventories fell.