This week's see-saw in crude prices continued on Wednesday with the trade flow reflecting headlines from the Russia-Ukraine war, supply boost and fall in demand from China on surging COVID-19 cases.
After losing nearly 1 per cent in the previous session on a strong dollar, a build-up in the US crude stockpile, and Shanghai's extended lockdown fuelled fears of slower demand; the benchmark Brent crude was last up about 25 cents at $106.90 per barrel.
US West Texas Intermediate futures were flat near $102 a barrel. The contract fell 1 per cent on Tuesday as US crude, and distillate stocks rose last week while gasoline inventories dipped, according to market sources citing American Petroleum Institute figures on Tuesday.
"Crude came under pressure as the European Union again decided to avoid any direct restrictions on Russia's crude or natural gas exports. The API report also weighs on price, which noted an unexpected increase in US crude oil stocks. Rising virus cases in China also have pressurised prices. However, supporting prices are supply risks and tighter US and global stocks," said Ravindra Rao, Vice President and Head of Commodity Research at Kotak Securities.
"Crude may remain rangebound to negative ahead of inventory report; however, supply risks may keep a floor to prices," he added.
On Tuesday, the dollar hit its highest in nearly two years, boosted by hawkish comments from Federal Reserve officials who pushed for a quick reduction in the central bank's bloated balance sheet.
A stronger dollar makes oil more expensive for holders of other currencies, so international oil prices move inversely to the greenback trend.
Demand worries also mounted after top oil importer China authorities extended a lockdown in Shanghai to cover all of the financial centre's 26 million people.
Wild gyrations were expected to be the norm, mainly driven by the newsflow from the Russia-Ukraine conflict.
"We expect crude oil prices to remain volatile to negative in today's session," said Rahul Kalantri, Vice President for Commodities at Mehta Equities.