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Oil rises on tight supplies; trade choppy on demand concerns

Oil rigs are seen at Vaca Muerta shale oil and gas drilling, in the Patagonian province of Neuquen, Argentina January 21, 2019. REUTERS / Agustin Marcarian / File image

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  • Unrest halves Libyan oil production Mass COVID testing for Beijing’s Chaoyang district
  • US inflation data increases fears of further large interest rate hikes

NEW YORK, June 13 (Reuters) – Oil prices rose on Monday in a volatile trading session as tight global supplies outweighed concerns that demand would be pushed by a flare-up in the COVID-19 cases in Beijing and more interest rate hikes.

Brent oil rose 68 cents to $ 122.69 a barrel at 12:13 EDT (1613 GMT). U.S. West Texas Intermediate oil rose 61 cents to $ 121.28 a barrel. Trading was volatile, with prices down around $ 3 a barrel previously.

Oil supplies are tight, with OPEC and allies unable to fully deliver on the promised increase in production due to a lack of capacity on the part of many producers, sanctions against Russia and unrest in Libya that have reduced production. read more

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Oil has risen in 2022 as Russia’s invasion of Ukraine intensified supply concerns and demand recovered from the COVID shutdowns. In March, Brent reached $ 139, the highest since 2008. Last week, both oil references rose more than 1%.

“We were struggling with the Russian loss (of oil), so now add an exclamation point to the Libyan situation,” said Robert Yawger, Mizuho’s chief energy officer.

On Saturday, the average price of American gasoline exceeded $ 5 per gallon for the first time, data from AAA showed. read more

Concerning demand, Beijing’s most populous district, Chaoyang, announced three rounds of mass testing to stem a “cruel” COVID-19 outbreak. read more

“We do not know what will happen to China. The mood is bad right now,” said Phil Flynn, an analyst at Price Futures.

Concerns about further interest rate hikes, reinforced by Friday’s US inflation data showing that the consumer price index rose 8.6% last month, also pushed oil down.

Other financial markets also fell, as investors were concerned that the Federal Reserve could tighten its policy too aggressively and cause a sharp decline. The S&P 500 was on its way to confirming a bear market. The next Fed policy decision is on Wednesday. read more

In Europe, Francesco Giavazzi, the closest economic adviser to Italian Prime Minister Mario Draghi, said on Monday that raising interest rates at the European Central Bank was not the right way to curb rising price increases. read more

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Reporting by Stephanie Kelly; additional reporting by Alex Lawler, Florence Tan and Mohi Narayan; Editing by Kirsten Donovan Editing by Bernadette Baum and David Gregorio

Our standards: Thomson Reuters Trust Principles.

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