Oil rises but heads for weekly decline as fears of weak demand limit gains

Oil well pump jacks operated by Chevron Corp. In San Ardo, California, United States, on Tuesday, April 27, 2021.

David Paul Morris | Bloomberg | Getty Images

Oil prices rose about 4% on Friday as US gasoline prices jumped to a record level, China appeared ready to ease epidemic restrictions, and investors feared supply tightening if the European Union banned Russian oil.

Brent crude futures rose $4.10, or 3.8 percent, to settle at $111.55 a barrel. US West Texas Intermediate crude rose $4.36, or 4.1 percent, to settle at $110.49.

This was WTI’s highest close since March 25 and its third consecutive weekly rise. Brent crude fell for the first time in three weeks.

US gasoline futures rose to an all-time high after inventories fell last week for the sixth consecutive week. This boosted the spread of gasoline cracks – a measure of refining profit margins – to its highest levels since hitting a record in April 2020 when WTI closed in negative territory.

“There hasn’t been an increase in gasoline stocks (in the US) since March,” said Robert Yauger, executive director of energy futures contracts at Mizuho, ​​noting that gasoline demand is expected to rise when the summer driving season begins on Memorial Day weekend. American.

The spread of US crack 3:2:1, another measure of refining margins that includes gasoline and diesel, rose to a record high, according to Refinitiv data going back to May 2021.

The AAA Automobile Club said U.S. prices at the pump rose to record highs Friday at $4.43 a gallon for gasoline and $5.56 for diesel.

Oil prices were volatile, buoyed by concerns that a possible European Union ban on Russian oil could tighten supplies, but under pressure from concerns that the outbreak of the COVID-19 pandemic could slash global demand.

An analyst at Rystad Energy said: “The EU ban, if fully implemented, could lead to the shutdown of about 3 million barrels per day (bpd) of Russian oil, which would completely disrupt and divert global trade flows, leading to a state of Market panic and extreme price fluctuations.” Louise Dixon.

This week, Moscow imposed sanctions on several European energy companies, causing supply concerns.

In China, authorities pledged to support the economy and city officials said Shanghai would begin easing traffic restrictions due to the coronavirus and open stores this month.

“Crude oil prices rose on optimism that the COVID situation in China has not deteriorated and with the recovery of risky assets,” said Edward Moya, chief market analyst at data and analytics firm OANDA.

Global stocks rose after a volatile week of trading, sending stock indices in the United States and Europe higher.

The pressure on oil prices during the week, pushed inflation and price hikes in the US dollar to a nearly 20-year high against a basket of currencies, making oil more expensive to buy in other currencies.

The European Union said that sufficient progress had been made to resume nuclear negotiations with Iran. The United States said it appreciated the European Union’s efforts, but said there was no agreement yet and no certainty that one could be reached.

Analysts said an agreement with Iran could add another million barrels of oil supplies to the market.

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