Oil rises as supply risk counters concerns about economic growth

ryanniesMay 20, 2022

New York — Oil prices rise as the European Union bans Russia’s oil on Friday and eases the blockade of COVID-19 in China, countering concerns that slowing economic growth will hurt demand. bottom.

Brent futures delivered in July rose 72 cents (0.6%) to $ 112.76 a barrel by 2:05 pm Eastern Standard Time (1805 GMT), and West Texas Intermediate (WTI) crude oil in June was 1.34. It rose by the dollar (1.2%) to $ 113.55. The last day of the previous month.

More actively traded WTI contracts in July rose about 0.7% to $ 110.66 a barrel.

It put Brent’s previous month’s premium on the same WTI deal It is on track to fall to its lowest level since October 2021. Lower premiums mean that energy companies are less likely to pick up US barrels for export.

This week, WTI recorded its fourth straight week of rise since mid-February, while Brent rose about 1% after falling about 1% last week.

Craig Aram, senior market analyst at OANDA, said:

In China, despite Shanghai’s announcement of the first new COVID-19 cases outside the quarantine area in five days, it did not notify the change to the end of the city-wide blockade scheduled for June 1. bottom.

The energy market expects that the lifting of some coronavirus restrictions in Shanghai will boost energy demand. China is the world’s largest importer of crude oil.

The EU hopes to reach an agreement on a proposed ban on Russia’s oil imports, including the carve-out of Russia’s most oil-dependent member states such as Hungary.

“Germany’s success in reducing Russia’s oil imports by more than half in a very short period of time has made it more likely that the EU embargo will be declared earlier rather than later,” said consultant BCA. The investigation was mentioned in a memo.

Large German companies have drafted plans to use an auction system to help distribute the supply available if Russia shuts down gas, but there are also concerns that it could punish SMEs. I have.

According to Baker Hughes rig numbers, this week in the United States, US energy companies have added oil and gas rigs for the ninth straight week.

The number of rigs is an indicator of future output growth.

Americans continued to grab the steering wheel, even though pump gasoline prices continued to hit record highs. AutoClub AAA said regular unleaded gasoline set a record of $ 4.59 per gallon on Friday.

In India, crude oil imports were highest in three and a half years in April as the world’s third-largest oil importers and consumers increased discounts on Russia’s oil purchases to help boost demand recovery and fight high prices.

In Norway, oil production in April was 10.6% below official expectations, but gas production was in line with expectations. (Additional report by Noah Browning of London and Sonari Paul of Melbourne, edited by Margherita Choi and Susan Fenton)