SINGAPORE (BLOOMBERG) - Oil rose above US$100 a barrel as China's Covid-19 cases eased ahead of US inflation data that may influence the pace of interest-rate hikes.

West Texas Intermediate futures rebounded after plunging around 9 per cent over two days. Infections in Shanghai and Beijing dropped on Tuesday (May 10), providing some cautious optimism of improvement after lockdowns led to surging inflation last month.

The oil market has been whipsawed over the past couple of months by Russia's invasion of Ukraine and virus restrictions across China.

The war has fanned inflation, driving up the cost of everything from food to fuels, with retail petrol in the US hitting a record ahead of the summer driving season.

Oil is still up more than 30 per cent for the year after a robust start underpinned by economies rebounding from the pandemic.

The oil ministers of Saudi Arabia and the United Arab Emirates warned that spare capacity is decreasing in all energy sectors as producers slash investment, driving up prices.

"A big US CPI (consumer price index) figure tonight might usher further speculation of more aggressive Fed rate hikes, which may generally dampen appetite for risk assets," said OCBC Bank economist Howie Lee.

Investors are also watching for the outcome of proposed sanctions by the European Union on Russian oil, he added.

Shanghai reported a 51 per cent drop in new coronavirus infections on Tuesday, with zero cases found in the community - a key metric for the city to end a punishing lockdown that has snarled global supply chains and left tens of millions of people stuck inside their homes for about six weeks.

The American Petroleum Institute reported US crude stockpiles rose by 1.62 million barrels last week, according to sources familiar with the figures.

Fuel inventories also expanded.

Government data is due later on Wednesday (May 11).