NEW YORK: Oil prices rose about 4% on Friday as U.S. gasoline prices jumped to a record high, China looked ready to ease pandemic restrictions and investors worried supplies will tighten if the European Union bans Russian oil.
Brent LCOc1 futures rose US$4.10, or 3.8%, to settle at $111.55 a barrel. U.S. West Texas Intermediate (WTI) crude CLc1 rose $4.36, or 4.1%, to settle at $110.49.
That was the highest close for WTI since March 25 and its third straight weekly rise. Brent fell for the first time in three weeks.
U.S. gasoline RBc1 futures soared to an all-time high after stockpiles fell last week for a sixth straight week. That boosted the gasoline RBc1-CLc1 crack spread - a measure of refining profit margins - to its highest since it hit a record in April 2020 when WTI finished in negative territory. EIA/S
"There has not been an increase in (U.S.) gasoline storage since March," said Robert Yawger, executive director of energy futures at Mizuho, noting gasoline demand is poised to spike when summer driving season starts on the U.S. Memorial Day holiday weekend.
The U.S. 3:2:1-crack spread CL321-1=R, another measure of refining margins that includes gasoline and diesel, rose to a record, according to Refinitiv data going back to May 2021.
Automobile club AAA said U.S. prices at the pump rose to record highs on Friday of $4.43 per gallon for gasoline and $5.56 for diesel.
Oil prices have been volatile, supported by worries a possible EU ban on Russian oil could tighten supplies but pressured by fears that a resurgent COVID-19 pandemic could cut global demand.
"An EU embargo, if fully enacted, could take about 3 million bpd (barrels per day) of Russian oil offline, which will completely disrupt, and ultimately shift global trade flows, triggering market panic and extreme price volatility," said Rystad Energy analyst Louise Dickson. Read full story
In China, authorities pledged to support the economy and city officials said Shanghai would start to ease coronavirus traffic restrictions and open shops this month. Read full story
"Crude prices rallied on optimism that China’s COVID situation was not worsening and as risky assets rebounded," said Edward Moya, senior market analyst at data and analytics firm OANDA.
Pressuring oil prices during the week, inflation and rate rises drove the U.S. dollar .DXY to a near 20-year high against a basket of currencies, making oil more expensive when purchased in other currencies. Read full story
The EU said there was enough progress to relaunch nuclear negotiations with Iran. The U.S. said it appreciated the EU's efforts but said there was no agreement yet and no certainty that one might be reached. Read full story [nL2N2X51LE]
Analysts said an agreement with Iran could add another 1 million bpd of oil supply to the market.- Reuters