Oil Steadies After Choppy Trade, U.S. Says Export Ban Not Ruled Out

Oil prices steadied on Tuesday after choppy trade as tight supply worries offset concerns over a possible recession and China's COVID-19 curbs.

Prices turned negative after U.S. Energy Secretary Jennifer Granholm said President Joe Biden had not ruled out using export restrictions to ease soaring domestic fuel prices.

"Initially the assumption is that is going to reduce the prices for products in the United States," said Phil Flynn, an analyst at Price Futures Group.

Brent crude rose 14 cents to settle at $113.56 a barrel. U.S. West Texas Intermediate (WTI) crude fell 52 cents to settle at $109.77 a barrel.

Oil has surged this year with Brent hitting $139 in March, the highest since 2008, after Russia's invasion of Ukraine exacerbated supply concerns.

Prices were supported earlier in the session as the European Union moved closer to agreeing to a ban on Russian oil imports. Such an embargo is likely to be agreed to "within days," Germany's economy minister said on Monday.

Travel during the upcoming U.S. Memorial Day weekend is expected to be the busiest in two years as more drivers hit the road and shake off coronavirus lockdowns despite high pump prices.

U.S. crude stocks rose by 567,000 barrels last week, according to market sources citing American Petroleum Institute figures released after the market settled. Gasoline inventories fell by 4.2 million barrels, while distillate stocks fell by 949,000 barrels. [API/S]

U.S. crude oil and gasoline inventories likely fell last week, while distillate stockpiles were seen up, an extended Reuters poll showed ahead of government data due on Wednesday.

However, worries about threats to the global economy, a main theme of the Davos meeting this week, also spurred fears over oil demand and weighed on prices.

Beijing is stepping up quarantine efforts to end its COVID-19 outbreak while Shanghai's lockdown is due to be lifted in a little more than a week.

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