West Texas Intermediate futures traded near $112 a barrel, and are heading for the best run of weekly increases since mid-February. Prices has been pushed higher in recent days by higher demand for motor fuels as the summer driving season approaches in the US. Gasoline and diesel have surged to record levels, with auto club AAA forecasting nationwide travel will approach the highest since the pandemic.
Crude has surged almost 50% this year, also helped along by Russia’s assault on Ukraine that sent shock waves through markets. While the US and UK have announced bans on Russian exports, flows to Asia have picked up. China is seeking to replenish strategic stockpiles with cheap Russian oil even as officials grapple to suppress Covid-19 outbreaks. India has also boosted purchases.
“Crude oil remains rangebound, caught between focusing on tight monetary policy driving an economic slowdown and a tightening global fuel-product market,” said Ole Hansen, head of commodities strategy at Saxo Bank. “Tightness in global fuel products will underpin fuel prices, already at record levels around the world.”
There were mixed signals from China on Friday. While banks cut a key interest rate for long-term loans by a record to bolster a slowing economy, Shanghai found the first cases of Covid-19 outside quarantine in six days. It raises questions on whether the easing of the city’s lockdown will be impacted.
Oil’s jump has also contributed to the fastest growth in inflation in decades.