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May 4 (Reuters) – Oil prices rose at the start of Asian trade on Wednesday after industry data showed drawdowns in U.S. crude and fuel stockpiles, raising supply concerns.

The gains come on the back of news from Tuesday that the European Union is working on new sanctions against Russia for waging war on Ukraine that will target Moscow’s oil industry.

European Commission President Ursula von der Leyen is expected to spell out the plans on Wednesday, officials said.

Brent crude futures rose 90 cents, or 0.9%, to USD 105.87 a barrel by 0001 GMT. WTI crude futures rose USD 1.00, or 1%, to USD 103.41 a barrel.

U.S. crude and fuel stocks fell last week, according to market sources citing American Petroleum Institute figures. Crude stocks fell by 3.5 million barrels for the week ended April 29, the sources said. API/S

“The API report had people stop worrying about the demand side and start worrying about the supply side again,” said Phil Flynn, an analyst at Price Futures group.

U.S. government data on stockpiles is due on Wednesday.

During the previous session, demand worries stemming from China’s prolonged COVID-19 lockdowns caused prices to fall by more than 2%.

Beijing is mass-testing residents to avert a lockdown similar to Shanghai’s over the past month. The capital’s restaurants were closed for dining in while some apartment blocks were sealed shut.

(Reporting by Stephanie Kelly; Editing by Sam Holmes)

NEW YORK/MILAN, May 3 (Reuters) – A gauge of global equity markets edged higher on Tuesday while 10-year U.S. Treasury yields slid from the 3% level as investors remained cautious, expecting the Federal Reserve to hike rates by the most in a single day since 2000 to curb inflation.

Feeding inflation worries, data showed U.S. job openings hit a record in March as worker shortages persisted. This suggested employers may need to raise wages, which likely would increase consumer prices.

Investors expect the Fed to hike rates by half a percentage point on Wednesday, and to detail plans to reduce its USD 8.9 trillion balance sheet. The U.S. central bank raised its policy interest rate by 25 basis points in March.

Major stock indices in Europe rose, but Wall Street eked out smaller gains as traders braced for a potentially more aggressive decision by policymakers on Wednesday.

“The Fed’s not going to be worried if eventually these next few rate hikes start to hurt growth and lead to some job losses, because right now the economy is on solid footing,” said Ed Moya, senior market analyst at OANDA.

MSCI’s all-country world index rose 0.39% and the pan-European STOXX 600 index gained 0.53% the day after a “flash crash” in Nordic markets caused by a trade involving a single Citigroup sell order.

The Dow Jones Industrial Average closed up 0.2%, the S&P 500 gained 0.48% and the Nasdaq Composite added 0.22%.

“We could get a dead-cat bounce after the Fed meeting if it’s not more hawkish than what the market has been fearing,” said Jimmy Chang, chief investment officer at the Rockefeller Global Family Office, “but I do think the broader trend is still very cautious on the equity side.”

Nine of the S&P 500’s sectors rose, led by a 2.87% gain in energy, while oil and gas jumped 4.1% in Europe to lead markets there.

Overnight in Asia, Australia’s central bank raised its key rate by a bigger-than-expected 25 basis points, lifting the Aussie dollar as much as 1.3% and hitting local shares.

The Bank of England is expected to raise rates on Thursday for the fourth time in a row.

Asian equities on Tuesday were mostly steady in holiday-thinned trade, with both Chinese and Japanese markets shut. But in Hong Kong, Alibaba shares fell as much as 9% on worries over the status of its billionaire founder Jack Ma.

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., May 3, 2022. REUTERS/Brendan McDermid

A state media report that Chinese authorities took action against a person surnamed Ma hit the stock hard, but it recouped losses after the report was revised to make clear it was not the company’s founder.

Germany’s benchmark 10-year Bund yield rose to 1% for the first time since 2015, before retreating as caution set in ahead of the anticipated U.S. and UK rate hikes this week.

The yield on 10-year Treasury notes fell 1.5 basis points to 2.981%, after breaching the key milestone of 3% for the first time since December 2018 on Monday.

The dollar fell against a basket of major currencies as investors weighed how much of the Fed’s expected move to hike rates this week and beyond was already priced in.

The dollar, which has been supported by safe haven buying on worries over the economic outlook, stayed just below the nearly two-decade high reached in April and the euro steadied above the lowest level in more five than years hit last month.

The dollar index fell 0.106%, while the euro rose 0.17% to USD 1.0522. The Japanese yen was little changed at 130.16 per dollar.

Oil slipped as concerns about demand due to China’s prolonged COVID lockdowns outweighed support from a possible European oil embargo on Russia over the war in Ukraine.

U.S. crude futures settled down USD 2.76 at USD 102.41 a barrel, while Brent fell USD 2.61 to settle at USD 104.97 a barrel.

Copper and aluminium prices fell sharply as weak manufacturing data on Monday, COVID-19 outbreaks in China and rising rates stoked fears that demand for metals will soften.

Gold firmed, tracking a slight retreat in Treasury yields and the dollar, while investors eyed an aggressive rate hike by the Fed on Wednesday.

U.S. gold futures settled up 0.4% at USD 1,870.60 per ounce.

Bitcoin fell 2.56% to USD 37,535.85.

(By Herbert Lash and Danilo Masoni)