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An oil refinery is seen in this file photograph. Picture: REUTERS
An oil refinery is seen in this file photograph. Picture: REUTERS

London — Oil prices hovered near three-month highs on Thursday after parts of Shanghai imposed new Covid-19 lockdown measures although China’s stronger-than-expected exports in May offered a boost to the demand outlook.

Brent crude futures for August dipped 14c or 0.1% to $123.44 a barrel at 10.45am GMT, while US West Texas Intermediate crude for July was at $121.88 a barrel, down 23c or 0.2%.

China’s May exports jumped 16.9% from a year earlier as easing Covid-19 curbs allowed some factories to restart, the fastest growth since January and more than double analysts’ expectations.

“Oil prices have remained flat, with the lockdown of the Minhang district in Shanghai spurring China Covid-19-zero part 2 fears, crimping demand in Asia today,” said Jeffrey Halley, Oanda’s senior market analyst for Asia Pacific.

“That said, it is indicative of how tight supplies are that oil has not retreated on that news today.”

Parts of Shanghai began imposing new lockdown restrictions on Thursday, with residents of Minhang district ordered to stay home for two days to control Covid-19 transmission risks.

“The export performance is impressive in the context of the country's multi-city lockdowns in the month,” Stephen Innes, managing partner at SPI Asset Management, said in a note.

Meanwhile, peak northern hemisphere summer petrol demand in the US continued to provide a floor to prices.

US petrol stocks unexpectedly dropped, data from the Energy Information Administration (EIA) showed on Wednesday, indicating resilience in demand for the motor fuel during the peak summer period despite sky-high pump prices.

“It’s hard to see significant downside in the coming months, with the gasoline market likely to only tighten further as we move deeper into driving season,” said ING's head of commodities research Warren Patterson. 

Reuters

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