RIYADH: Oil prices rose on Wednesday, recovering from six-month lows hit the previous day, as a larger-than-expected drop in US oil and gasoline stocks reminded investors that demand remains firm, if overshadowed by the prospect of a global recession.
Brent crude futures rose 56 cents, or 0.6 percent, to $92.90 a barrel by 0415 GMT.
West Texas Intermediate crude futures climbed 62 cents, or 0.7 percent, to $87.15 a barrel.
The contracts slumped about 3 percent on Tuesday as weak US housing starts data spurred concerns about a potential global recession.
Japan raises gasoline subsidy for oil distributors
Japan raised its gasoline subsidy for oil distributors to 33.8 yen (25.2 cents) a liter for the seven days from Thursday, compared with 31.4 yen a week earlier, the industry ministry said on Wednesday.
The temporary subsidy program was adopted in January to cushion a blow from high crude prices because of tight global supplies, while the Ukraine conflict that began on Feb. 24 added further pressure.
Venezuela to support reconstruction of Cuban port damaged by oil fire
Venezuelan President Nicolas Maduro said on Tuesday that Venezuela would support Cuba in the reconstruction of its only supertanker port in Matanzas, which was partially destroyed by a fire after lightning struck one of its crude tanks.
Cuba has long relied on the 2.4 million-barrel Matanzas terminal, about 130 km from Havana, for most imports and storage of crude and heavy fuel oil.
Maduro directed Venezuela’s oil minister and the president of state-run PDVSA to get in touch with the corresponding Cuban authorities “to begin the design of the reconstruction of the supertanker yard,” he said in a speech honoring the Venezuelan firefighters sent to combat the blaze.
Mexico also sent personnel to put out the fire.
“We are going to design where it will be built, where the loading yard will be and begin the construction,” Maduro said.
Australia’s Santos approves $2.6bn Alaska oil project
Santos Ltd. said on Wednesday it will move ahead in developing a $2.6 billion Alaskan oil project, a surprise decision for the market that drove its shares down despite the Australian energy producer posting a record first-half profit.
The company also said it was in advanced talks with shortlisted parties to sell a 5 percent stake in its prized asset, PNG LNG in Papua New Guinea, and reap an estimated $1.5 billion, which analysts expect will be used to fund the Pikka project in Alaska.
Santos CEO Kevin Gallagher said Pikka, co-owned by Spain’s Repsol SA, was “the right project at the right time in the right location,” forecasting a strong 19 percent internal rate of return based on an oil price of $60 a barrel.
“Low-carbon oil projects like Pikka Phase 1 respond to new demand for OECD supply and are critical for global and United States energy security that has been highlighted since the Russian invasion of Ukraine,” Gallagher said in a statement.
Analysts had thought Santos would sell its 51 percent stake in Pikka rather than go ahead with the 80,000 barrels per day project as it has its hands full working on a major gas project and potential oil development in Australia.
However, Santos said on Wednesday the oil development in Australia, Dorado, would not go ahead this year due to inflationary pressures and supply chain uncertainty.
Shell to shut Gulf of Mexico crude pipes for 2 weeks
Shell on Tuesday said it plans to shut for two weeks in September a key crude oil pipeline in the Gulf of Mexico that supplies oil to Louisiana refineries.
The Odyssey and Delta crude pipelines in September will be shut for planned maintenance early-to-mid September, Shell said in a statement.
The pipelines transport Heavy Louisiana Sweet crude from offshore oilfields and switching to other pipelines is not an option, Shell added.
The Odyssey pipeline in the eastern Gulf of Mexico has 220,000 barrels per day capacity and is connected to the Delta pipeline with deliveries into terminals in Louisiana and to Shell’s Norco refinery, according to the company’s website.
(With input from Reuters)