Sign Up for FREE Daily Energy News
Canadian Flag CDN NEWS  |  US Flag US NEWS  | TIMELY. FOCUSED. RELEVANT. FREE
  • Stay Connected
  • linkedin
  • twitter
  • facebook
  • youtube2
BREAKING NEWS:

Copper Tip Energy Services
Hazloc Heaters
Vista Projects
Vista Projects
Hazloc Heaters
Copper Tip Energy


Oil Rises as Traders Focus on US Gasoline and China Demand


English Español 简体中文 हिन्दी Português
These translations are done via Google Translate

May 18, 2022

(Bloomberg)

Oil rose as tight US product markets and the prospect of higher demand in China, the world’s top importer, add urgency to the hunt for barrels.

West Texas Intermediate traded near $114 a barrel, recovering from Tuesday’s drop. The American Petroleum Institute reported that gasoline inventories sank by more than 5 million barrels last week, according to people familiar with the data, which also showed lower crude holdings. Official figures come later Wednesday.

In Asia, traders are on the lookout for signals that China may be poised to ease curbs imposed on Shanghai, potentially reviving energy consumption. Chinese officials had locked down the financial capital and other cities in an effort to eliminate coronavirus cases. The commercial hub again reported no new infections outside of quarantine, even as other locales reported rising cases.

Oil is on course for a sixth monthly increase — potentially the best run in a decade — as rising demand and disruptions from the war in Ukraine combine to support gains. The surge is contributing to higher inflation, and Federal Reserve Chair Jerome Powell vowed Tuesday that the US central bank would keep raising interest rates until there is clear evidence price gains are slowing.

“The short-term solution for higher oil prices is that there really isn’t one,” said Matt Stanley, a trader and broker at Starfuels in Dubai. “I can’t find a drop of diesel out there and that goes for all fuels. There isn’t anything that’s not needed, and that’s driving the entire oil complex higher.”

GLJ
GLJ

Oil markets are in backwardation, a bullish pattern in which near-term prices trade above those further out. The spread between WTI’s two nearest December contracts is near $13 a barrel, up from $5 at the start of the year.

To ease the products shortage and take pressure off prices, refineries would have to retool to take different crude grades as oil processors in Europe and the US look for replacements for Russian barrels, Stanley said. That will take time and investment, keeping prices high, he added.

Prices:
  • WTI for June delivery traded 1.2% higher at $113.74 a barrel on the New York Mercantile Exchange by 11:48 a.m. in London.
  • Brent for July settlement added 0.9% to $112.97 a barrel on the ICE Futures Europe exchange.

US gasoline prices, both futures contracts and at the pump — have touched unprecedented levels despite President Joe Biden ordering a vast release of crude from strategic reserves. Gasoline holdings have already dropped by about 3% in 2022, and stand below the five-year seasonal average.

“US inventory data has proved supportive for oil,” said Warren Patterson, Singapore-based head of commodities strategy at ING Groep NV. “A tightening gasoline market as we head into driving season should be supportive for crude demand, given the need for higher refinery runs.”

With the summer driving season about to begin, there’s plenty of pain at the pump. Retail gasoline prices have risen above $4 a gallon in all US states for the first time, with California, the most expensive state, seeing prices average more than $6 a gallon, according to data from auto club AAA.



Share This:



More News Articles


GET ENERGYNOW’S DAILY EMAIL FOR FREE