The oil kept increases of over $ 105 per barrel. barrel as investors weighed higher demand for refined products against a series of lockdowns in major cities in China.
West Texas Intermediate futures were slightly changed in early Asian trading after closing 0.5% higher on Monday. Record fuel exports from the U.S. Gulf Coast are draining local supplies, pushing diesel margins to a new high. The tightness reflects a higher global demand for fuels, especially from Latin America, as supply remains low due to the rejection of Russian cargoes.
Oil has struggled with a tumultuous period of trade since Russia’s invasion of Ukraine in late February. Prices on Monday initially withdrew as Beijing and Shanghai implemented strict measures to curb a widespread Covid-19 outbreak, raising concerns about demand. In Europe, a ban on Russian imports is set to be proposed by the EU before the end of the year.
“Oil is currently being lifted by record-high US fuel shipments, but it is most likely a temporary factor,” said Will Sungchil Yun, a senior commodities analyst at VI Investment Corp. in Seoul, by telephone. “The market will continue to be rattled by the prospect of a ban on Russian imports and China’s Covid Zero strategy, which will have a more lasting impact on prices.”
Crude oil rose for a fifth month in April, marking the longest monthly victory streak since January 2018. Still, concerns about an economic downturn, persistently high inflation and an increasingly aggressive tightening rhetoric from Federal Reserve officials have continued to rattle the market and leave prices vulnerable to large fluctuations.
Brent remains in backwardation, a bullish structure where near-dated contracts are more expensive than later-dated ones. Benchmark’s prompt time spread closed at $ 1.56 per barrel in backwardation on Monday, compared to a $ 3.88 maximum on March 8th.
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