Oil rises after sinking on China demand concerns and strong dollar

Oil prices edged up slightly early on Thursday due to supply constraints after hitting their lowest point since January a day earlier on growing fears of a slump in crude demand, triggered by wide lockdowns in China to contain rising Covid-19 infections, amid rising interest rates and a strong dollar.

Brent, the benchmark for two thirds of the world's oil, which fell more than 5 percent on Wednesday, was trading 1.06 percent higher at $88.93 a barrel at 7.45 am UAE time. West Texas Intermediate, the gauge that tracks US crude, which slid about 6 percent yesterday, was up 1.16 percent, at $82.89 a barrel. Oil had recovered from early losses on Wednesday due to rising geopolitical risks and Russian President Vladimir Putin warning his country would not supply energy to countries that back a proposed price cap by the US and Europe on Moscow's crude in response for its military offensive in Ukraine.

Prices pushed back up after the US Energy Information Administration issued its weekly crude inventory report and its short-term outlook report in which it raised its projections for global oil demand.

Global oil demand growth will rise by an average of 2.1 million barrels per day throughout 2022 and by an average of 2 million bpd in 2023, the EIA said. It estimates that 99.4 million bpd of petroleum and liquid fuels was consumed globally in August 2022, up 1.6 million bpd from August 2021.