Crude Oil Edges Up as Supply Risks Counteract Economic Growth Worries

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Oil prices rose slightly on Friday as a planned European Union ban on Russian oil and the easing of COVID-19 lockdowns in China countered concerns that slowing economic growth will hurt demand. .

Brent crude futures for July delivery rose 72 cents, or 0.6%, to $112.76 a barrel as of 2:05 p.m. EDT (6:05 p.m. GMT), while U.S. West Texas Intermediate crude (WTI) for June rose $1.34, or 1.2%, to $113.55 on its last day as a first month.

The most actively traded WTI contract for July rose about 0.7% to $110.66 a barrel.

This put the first-month Brent premium on the same WTI contract on track to fall to its lowest level since October 2021. A lower premium means energy companies would be less likely to recover US barrels for the export.

For the week, WTI was on track for its fourth consecutive weekly gain for the first time since mid-February, while Brent was up around 1% after falling around 1% last week. .

“Risks remain tilted to the upside…given China’s reopening and the EU’s continued push for a Russian oil embargo,” said Craig Erlam, senior market analyst at OANDA.

In China, Shanghai reported no changes to its planned end of an extended citywide lockdown on June 1, even as the city announced its first new COVID-19 cases outside quarantine zones. in five days.

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

The EU hopes to strike a deal on a proposed Russian crude import ban, which includes exclusions for member states most dependent on Russian oil, such as Hungary.

“The chances of an EU embargo being declared sooner rather than later have increased following Germany’s success in more than halving Russian oil imports in a very short period of time,” the firm said. BCA Research consultancy in a note.

Big German companies are drawing up a plan to use an auction system to help ration available supplies in case Russia cuts its gas, although some fear it could punish smaller companies.

In the United States, U.S. energy companies added oil and gas rigs this week for the ninth straight week, according to the Baker Hughes rig count, as most small producers react to high prices and market pressures. government to increase production.

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

Americans have continued to drive even as gas prices at the pump continue to soar. The AAA automobile club said regular unleaded gasoline hit a record high of $4.59 a gallon on Friday.

India’s crude oil imports in April were the highest in 3½ years as the world’s third-largest oil importer and consumer increased its purchases of discounted Russian oil to fuel the recovery in demand and combat oil spills. high prices.

In Norway, crude production in April exceeded official forecasts by 10.6%, while its gas production was in line with expectations.

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