On Friday, oil prices increased around 4% as US gasoline prices hit a new high, China appeared to be easing its curbs, and investors concerned that supply would tighten if the European Union banned Russian oil.
Brent futures increased by $4.10, or 3.8 percent, to $111.55 per barrel. WTI crude in the United States increased $4.36, or 4.1 percent, to $110.49 per barrel.
WTI closed at its highest level since March 25 and was up for the third week in a row. Brent had his first fall in three weeks.
After stockpiles fell for the sixth week in a row last week, US gasoline futures rocketed to an all-time high. The gasoline crack spread – a measure of refining profit margins – soared to its highest level since April 2020, when WTI finished in the negative zone.
“There hasn’t been an increase in (US) gasoline storage since March,” said Robert Yawger, Mizuho’s executive director of energy futures, noting that summer driving season will begin on the US Memorial Day holiday weekend.
According to Refinitiv data dating back to May 2021, the US 3:2:1-crack spread, another measure of refining profits that covers gasoline and diesel, reached a new high.
According to AAA, gasoline prices in the United States hit record highs of $4.43 per gallon and $5.56 per gallon on Friday.
Oil prices have been turbulent, with support coming from concerns that a prospective EU ban on Russian oil might constrain supplies, but pressure coming from concerns that a resurgent COVID-19 epidemic could reduce world consumption.
“If fully implemented, an EU embargo could take around 3 million bpd (barrels per day) of Russian oil offline, utterly disrupting and ultimately shifting global trade patterns, provoking market panic and dramatic price volatility,” said Louise Dickson of Rystad Energy.
Moscow imposed sanctions on numerous European energy corporations this week, prompting supply concerns.
Authorities in China promised to assist the economy, and local officials in Shanghai said they would begin easing coronavirus traffic restrictions and opening stores this month.
“Crude prices rose on hopes that China’s COVID situation would not worsen, and riskier assets recovered,” said to Edward Moya, senior market analyst at data and analytics firm OANDA.
After a tumultuous week of trading, global stocks rallied, lifting market indices in the US and Europe.
Inflation and rate hikes pushed the US dollar to a near 20-year high against a basket of currencies over the week, making oil more expensive when purchased in other currencies.
The EU stated that enough progress had been made to restart nuclear talks with Iran. The US said it appreciated the EU’s efforts but that no agreement had been reached yet and that there was no guarantee that one would be reached.
According to analysts, an agreement with Iran might bring another 1 million barrels per day to the market.
