Oil Prices Extend Their Gains Following China's Stimulus Announcement

Oil prices increased in early Asian trade on Wednesday, extending gains from the previous session on China's central bank's announcement that it will bolster the country's economy.

Concerns over demand, on the other hand, weighed on futures as Beijing officials scrambled to contain a nascent COVID-19 outbreak and escape the same crippling city-wide lockdown that has engulfed Shanghai for a month.

By 0019 GMT, Brent crude futures had risen $1.11, or 1.1 percent, to $106.10 a barrel. West Texas Intermediate crude futures in the United States increased by 84 cents, or 0.8 percent, to $102.54 a barrel.

Crude oil prices increased by roughly 3% in the previous session's turbulent activity.

China's central bank announced Tuesday that it will strengthen its economy's prudent monetary policy support. Any stimulus would increase demand for oil.

Meanwhile, Russia's Gazprom (MCX:GAZP) has informed Poland's PGNiG that it will suspend gas deliveries along the Yamal pipeline beginning Wednesday morning, according to a statement from PGNiG. Poland will be required to make payments under a new arrangement on Tuesday, Gazprom said.

The announcement boosted NYMEX ultra-low sulfur diesel futures by more than 9% on Tuesday, settling at a record close of $4.47 per gallon.

In terms of supply, the US government will release data on crude stocks later Wednesday. According to industry figures released Tuesday, US crude and distillate inventories increased last week, but gasoline inventories decreased.