Rumblings about Russian oil supply disruption push prices up
Both Brent crude and West Texas Intermediate oil contracts are set to finish up on the week and post their fifth straight monthly gains
29 April 2022 - 13:49
byNoah Browning
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
London — Oil prices rose for a fourth day on Friday as fears of Russian supply disruption trumped Covid-19 lockdowns in China, the world’s biggest crude importer.
Brent crude futures rose $1.60, or 1.5%, to $109.19 a barrel by 9.12am GMT after gaining 2.1% in the previous session. The front-month June contract expires later on Friday. The more active July contract rose $1.48 to $108.74.
US West Texas Intermediate crude gained $1.01, or 1%, to $106.37 after advancing by 3.3% on Thursday.
Both contracts are set to finish up on the week and post their fifth straight monthly gains, buoyed by the increased likelihood that Germany will join other EU member states in an embargo on Russian oil.
Oil prices have remained volatile, however, with China showing no signs of easing lockdown measures despite the impact on its economy and global supply chains.
“With both full and partial lockdowns ramping up since March, China’s economic indicators have plunged further into the red. We now expect China's GDP to slow further in quarter two,” Wood Mackenzie’s head of APAC economics, Yanting Zhou, said in a note.
“Oil market volatility is set to continue, with the potential for more widespread and prolonged lockdowns into May and beyond, skewing the near-term risks for China's oil demand — and prices — to the downside.”
On the supply side, Opec+ is likely to stick to its existing deal and agree to another small output increase for June when it meets on May 5, six sources from the producer group told Reuters on Thursday.
However, Russian oil production could fall as much as 17% in 2022, an economy ministry document seen by Reuters showed on Wednesday, as Western sanctions over Russia’s invasion of Ukraine hurt investments and exports.
Sanctions have also made it increasingly difficult for Russian ships to send oil to customers, prompting ExxonMobil to declare force majeure for its Sakhalin-1 operations and curtail output.
“If Europe is suddenly required to look for huge amounts of gas or oil supplies in international markets, that will offset China’s slowdown fears and send prices higher,” said Jeffrey Halley, a senior market analyst at Oanda.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Rumblings about Russian oil supply disruption push prices up
Both Brent crude and West Texas Intermediate oil contracts are set to finish up on the week and post their fifth straight monthly gains
London — Oil prices rose for a fourth day on Friday as fears of Russian supply disruption trumped Covid-19 lockdowns in China, the world’s biggest crude importer.
Brent crude futures rose $1.60, or 1.5%, to $109.19 a barrel by 9.12am GMT after gaining 2.1% in the previous session. The front-month June contract expires later on Friday. The more active July contract rose $1.48 to $108.74.
US West Texas Intermediate crude gained $1.01, or 1%, to $106.37 after advancing by 3.3% on Thursday.
Both contracts are set to finish up on the week and post their fifth straight monthly gains, buoyed by the increased likelihood that Germany will join other EU member states in an embargo on Russian oil.
Oil prices have remained volatile, however, with China showing no signs of easing lockdown measures despite the impact on its economy and global supply chains.
“With both full and partial lockdowns ramping up since March, China’s economic indicators have plunged further into the red. We now expect China's GDP to slow further in quarter two,” Wood Mackenzie’s head of APAC economics, Yanting Zhou, said in a note.
“Oil market volatility is set to continue, with the potential for more widespread and prolonged lockdowns into May and beyond, skewing the near-term risks for China's oil demand — and prices — to the downside.”
On the supply side, Opec+ is likely to stick to its existing deal and agree to another small output increase for June when it meets on May 5, six sources from the producer group told Reuters on Thursday.
However, Russian oil production could fall as much as 17% in 2022, an economy ministry document seen by Reuters showed on Wednesday, as Western sanctions over Russia’s invasion of Ukraine hurt investments and exports.
Sanctions have also made it increasingly difficult for Russian ships to send oil to customers, prompting ExxonMobil to declare force majeure for its Sakhalin-1 operations and curtail output.
“If Europe is suddenly required to look for huge amounts of gas or oil supplies in international markets, that will offset China’s slowdown fears and send prices higher,” said Jeffrey Halley, a senior market analyst at Oanda.
Reuters
Oil volatile on China lockdowns, Russia sanctions
Oil prices fluctuate as issues around Russia and China sway traders
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Most Read
Related Articles
Russia missile strikes prove Kyiv has not escaped the war
Oil prices eroded by China lockdowns as demand concerns linger
Published by Arena Holdings and distributed with the Financial Mail on the last Thursday of every month except December and January.