Oil rises on US reserve plan

Oil rose after the U.S. announced plans to replenish strategic reserves. Oil reversed course at midday, extending gains for a fourth day after the Biden administration announced plans to replenish strategic reserves after completing maintenance work later this year. U.S. crude rebounded from a 2.5% decline earlier in the session to settle above $73 a barrel. Trading began lower on Tuesday on news that China’s overall export growth slowed in April and imports fell sharply, shaking market confidence in demand. The U.S. decision to cancel a previously mandated sale of about 140 million barrels and begin buying crude later this year to replenish the strategic cache stopped the slide. “The price is right for the U.S. to start replenishing strategic oil reserves, providing a much-needed bid for oil bulls as recession headwinds grow,” said Daniel Ghali, commodity strategist at TD Securities. Investors are closely watching for news on when the U.S. will replenish reserves, which are at their lowest level in four decades. The administration has previously said it planned to restock the cache when oil prices fall to around $70 a barrel. Oil has fallen about 10% this year as concerns about the Fed’s monetary tightening and the potential for a U.S. recession weigh on a resilient physical market. Bank of America Corp. on Tuesday cut its Brent crude forecast on a weaker outlook for global demand. Still, the United Arab Emirates, a key OPEC member, downplayed the need for deeper output cuts after restrictions began this month.