Oil Prices Rise on Expectations of A Tighter Supply As Demand Increases

Oil prices surged in early trade on Wednesday, bolstered by limited supplies and the expectation of increased demand as the U.S. summer driving season begins.

At 00:20 GMT, Brent crude futures for July increased 46 cents, or 0.4%, to $114.02 a barrel. Futures for U.S. West Texas Intermediate (WTI) crude for delivery in July rose 58 cents, or 0.5 percent, to $110.35 per barrel.

Brent increased by 0.1% on Tuesday, while WTI declined by 52 cents.

France's new foreign minister expressed optimism on Tuesday that those remaining opposed to a new EU sanctions package that would phase out Russian oil shipments to the bloc might be persuaded and that the bloc would reach an agreement that would have the impact of constraining global supply.

Meanwhile, a Biden administration official departed for India on Tuesday to discuss U.S. sanctions on Russia over its invasion of Ukraine with Indian officials and private industry executives, according to the Treasury Department, as Washington seeks to prevent an increase in India's purchases of Russian oil. Moscow refers to its efforts in Ukraine as an "extraordinary military operation."

Supply might tighten just as Memorial Day weekend travel in the United States is anticipated to be the busiest in two years, as more Americans hit the road despite coronavirus pandemic restrictions and high fuel prices.

While oil stocks increased by 567,000 barrels last week, gasoline inventories decreased by 4.2 million barrels, according to market sources citing the American Petroleum Institute. Additionally, distillate stockpiles decreased by 949,000 barrels. 

On Wednesday, the U.S. government was due to release stockpile data. In a Reuters survey, analysts predicted that U.S. crude oil and gasoline inventories would fall last week, but distillate inventories would rise. 

In China, Beijing intensified quarantine efforts to stop its month-long COVID outbreak, while in Shanghai, officials aim to maintain the majority of restrictions in place this month, prior to a more comprehensive easing of the two-month-long lockdown on June 1.