Workers walk as oil pumps are seen in the background in the Uzen oil and gas field in the Mangistau Region of Kazakhstan November 13, 2021.
Workers walk as oil pumps are seen in the background in the Uzen oil and gas field in the Mangistau Region of Kazakhstan November 13, 2021. Reuters / PAVEL MIKHEYEV

Oil rose on Wednesday after plunging nearly 10% in the last two sessions, buoyed by supply concerns as the European Union works on gaining support for a Russian oil embargo and flows of Russian gas to Europe through a key transit point in Ukraine dried up.

The EU has proposed an embargo on Russian oil, which analysts say would further tighten the market and shift trade flows. A vote, which needs unanimous support, has been delayed as Hungary has dug in its heels in opposition.

Brent crude was up $2.99, or 2.9%, to $105.45 a barrel at 0950 GMT, while U.S. West Texas Intermediate crude climbed $3.09, or 3.1%, to $102.85.

"The oil market is regaining ground this morning as bottom pickers enter the fray," said Stephen Brennock of oil broker PVM.

Oil also gained on hopes of Chinese economic stimulus after China's factory-gate inflation eased and investors took comfort in signs of lower domestic COVID-19 infections, and on the disruption to flows of Russian gas.

"I suspect the gas disruptions in Ukraine are having a steadily increasing impact," said Jeffrey Halley, analyst at brokerage OANDA.

Oil has surged in 2022 as Russia's Ukraine invasion added to supply concerns, with Brent reaching $139, the highest since 2008, in March. Worries about growth from China's COVID curbs and U.S. interest rate hikes have prompted this week's slump.

A backdrop of tight supply because of what major producers say is partly a result of inadequate investment remains supportive for oil. The United Arab Emirates energy minister highlighted these concerns on Tuesday.

In focus for investors on Wednesday will be U.S. consumer price data at 1230 GMT, which could give an indication of whether the Fed will raise rates even more aggressively to combat inflation. [MKTS/GLOB]

And on the oil front, the latest U.S. government supply report is due at 1430 GMT. Analysts expect a small drop in crude stocks, although Tuesday's American Petroleum Institute report said they increased. [EIA/S] [API/S]