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:

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


Oil Roars to Sixth Monthly Advance on EU Ban, China’s Reopening


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

May 31, 2022

Oil headed for its longest run of monthly gains in more than a decade as European Union leaders agreed to pursue a partial ban on imports of crude from Russia while China further eased anti-virus curbs, aiding demand.

Brent crude topped $124 a barrel, hitting the highest level since early March. The latest round of EU sanctions would forbid buying oil from Russia delivered by sea but includes a temporary exemption for pipelines, European Council President Charles Michel said. The package, designed to punish Moscow for the invasion of Ukraine, also proposes a ban on insurance related to shipping oil to third countries.

Crude has soared this year as the conflict in Europe tightened global supplies at a time of rising demand, depleting stockpiles and boosting product prices to all-time highs. Brent and US benchmark West Texas Intermediate are on course to close out sixth monthly climbs in May. Oil prices have also been lifted as US motorists kick off the nation’s busy summer driving season just as authorities in China loosen anti-virus curbs that had hurt energy consumption.

The EU’s move was agreed during a leaders’ summit in Brussels after members accommodated objections from Hungary, which had been blocking the embargo as it sought assurances that its energy supplies wouldn’t be disrupted. Under the deal, the country would continue to receive Russian oil via pipeline.

“If it is implemented as mentioned before, Russian oil will still flow to Europe over the coming months, but essentially the ban is likely to boost even more longer dated prices,” said Giovanni Staunovo, a commodity analyst at UBS Group AG. “The stronger factor to watch is the re-opening of China and the summer travel plans in the Western World.”

GLJ
GLJ

Oil’s surge has helped to spur the fastest inflation in decades, prompting central bankers including the US Federal Reserve to tighten policy. Later on Tuesday, US President Joe Biden will hold a rare Oval Office meeting with Chair Jerome Powell to discuss the state of the American and global economies.

Prices:
  • Brent for July settlement gained 1.6% to $123.66 a barrel on the ICE Futures Europe exchange as of 10:40 a.m. in London.
    • The August contract, which has more volume and open interest, traded 1.6% higher at $119.46 a barrel.
  • West Texas Intermediate for July delivery was at $118.75 a barrel on the New York Mercantile Exchange, about 3% higher than Friday’s settlement.
    • There was no settlement on Monday due to a US holiday.

The war in Ukraine has upended global crude flows, ushering in a period of intense volatility as traders price in waves of disruption, as well as increased consumption in most economies. The EU’s latest push follows bans by the US and UK on Russian exports, although buyers in Asia — particularly China and India — have stepped in to take more of the shunned cargoes.

In China, there are further signs of lockdowns easing, stoking mobility. Shanghai will let people in areas deemed low risk for Covid-19 leave housing compounds, as the key hub moves to dismantle the last remaining curbs that confined most of its 25 million residents to their homes for two months.

The oil market is steeply backwardated, a bullish pattern marked by near-term prices trading at a substantial premium to longer-dated ones. Brent’s prompt spread — the difference between its two nearest contracts — was $4.30 a barrel in backwardation, up from $2.20 at the end of April. Another widely watched metric, the December-December differential, neared $16 a barrel.



Share This:



More News Articles


GET ENERGYNOW’S DAILY EMAIL FOR FREE