Oil settles up as supply risks outweigh economic worries
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[May 21, 2022] By
Scott DiSavino
NEW YORK (Reuters) -Oil prices settled
slightly higher on Friday as a planned European Union ban on Russian oil
and easing of COVID-19 lockdowns in China countered concerns that
slowing economic growth will hurt demand.
Brent futures for July delivery rose 51 cents, or 0.5%, to $112.55 a
barrel. U.S. West Texas Intermediate (WTI) crude for June rose $1.02, or
0.9%, to settle at $113.23 on its on its last day as the front-month.
WTI notched its fourth straight week of gains, which it last did in
mid-February. Brent gained about 1% this week after falling about 1%
last week.
The more actively-traded WTI contract for July was up about 0.4% to
$110.28 a barrel.
"The risks remain tilted to the upside ... given the Chinese reopening
and continued efforts towards a Russian oil embargo by the EU," said
Craig Erlam, a senior market analyst at OANDA.
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In China, Shanghai did not signal any change to its planned end of a
prolonged city-wide lockdown on June 1 even though the city announced
its first new COVID-19 cases outside quarantined areas in five days.
The energy market expects the lifting of some coronavirus restrictions
in Shanghai to boost energy demand. China is the world's top crude
importer.
The EU is hoping to clinch a deal on a proposed ban of Russian crude
imports which includes carve-outs for member states most dependent on
Russian oil, such as Hungary.
"Odds of an EU embargo being declared sooner rather than later increased
in the wake of Germany's success in cutting Russian oil imports by more
than half in a very short period," consultancy BCA research said in a
note.
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![](../images/052122pics/busine35.jpg)
Pump jacks operate at sunset in an oil field
in Midland, Texas U.S. August 22, 2018. REUTERS/Nick Oxford
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German big business is drafting a plan to use an auction system to help ration
available supplies in the event Russia cuts off its gas, although some fear it
could punish smaller firms.
In the United States, U.S. energy firms this week added oil and natural gas rigs
for a ninth week in a row, according to the Baker Hughes rig count, as mostly
small producers respond to high prices and prodding by the government to ramp up
output.
The rig count is an indicator of future output growth.
Americans continued to get behind the wheel even though gasoline prices at the
pump keep hitting record highs. Auto club AAA said national average regular
unleaded gasoline prices hit a record $4.59 per gallon on Friday.
In India, crude oil imports in April were the highest in 3-1/2 years as the
world's third biggest oil importer and consumer ramped up discounted Russian oil
purchases to fuel demand recovery and fight high prices.
In Norway, crude output in April missed official forecast by 10.6%, while its
gas production was in line with expectations.
(Additional reporting by Noah Browning in London and Sonali Paul in Melbourne;
Editing by Marguerita Choy, Susan Fenton and David Gregorio)
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