An aerial view shows an oil plant of Idemitsu Kosan Co. in Ichihara, east of Tokyo, Japan November 12, 2021, in this photo taken by Kyodo. Picture taken November 12, 2021. Mandatory Credit Kyodo/via REUTERS

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MELBOURNE, June 14 (Reuters) – Oil prices hovered in positive and negative territory on Tuesday, holding up despite recession fears and potential new COVID-19 restrictions in China that could dampen demand as the market remains tight stocked.

U.S. West Texas Intermediate (WTI) crude fell 4 cents to $120.89 a barrel at 0156 GMT, while Brent futures fell 6 cents to $122.21 a barrel.

“Discussions within the oil complex still revolve around declining production in Libya, China continuing to impose measures to slow the spread of COVID and concerns over global recession woes causing demand destruction” , said Stephen Innes, managing partner at SPI Asset Management.

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The supply crunch has been compounded by a drop in exports from Libya amid a political crisis that has hit production and ports, while other OPEC+ producers struggle to meet their quotas of production and that Russia is facing bans on its oil because of the war in Ukraine.

Analysts at ANZ Research quoted Libyan Oil Minister Mohamed Aoun as saying production in the country had fallen to 100,000 barrels before the day, from 1.2 million bpd last year.

On the demand side, the focus is on China, where a COVID outbreak in a Beijing bar has raised fears of a new phase of lockdown just as restrictions were eased. Read more

Unlike other risky assets, the oil market has ignored recession fears so far.

“For now, the perceived tightening of oil supply provides resilience to oil prices,” said Tobin Gorey, commodities analyst at Commonwealth Bank.

The market will wait for weekly U.S. inventory data from the American Petroleum Institute on Tuesday and the U.S. Energy Information Administration on Wednesday to get a sense of how tight crude and fuel supplies are.

Six analysts polled by Reuters expect U.S. crude inventories to have fallen by 1.2 million barrels in the week to June 3, while forecasting gasoline inventories to have risen by around 800 000 barrels and that distillate inventories, which include diesel and heating oil, remained unchanged.

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Reporting by Sonali Paul; edited by Richard Pullin

Our standards: The Thomson Reuters Trust Principles.

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