Oil settles as supply risks outweigh economic worries

Pump jacks work at sunset in an oil field in Midland, Texas, U.S., August 22, 2018. REUTERS/Nick Oxford

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  • WTI open interest falls to lowest since July 2016 for second day
  • Shanghai still expects to end some COVID restrictions on June 1
  • EU hopes to strike deal on proposed Russian crude ban
  • US oil and gas rig count increases for 9th week – Baker Hughes

NEW YORK, May 20 (Reuters) – Oil prices edged higher on Friday as the European Union’s planned ban on Russian oil and the easing of COVID-19-related containment measures in China thwarted concerns that slower economic growth is hurting demand.

Brent crude futures for July delivery rose 51 cents, or 0.5%, to $112.55 a barrel. U.S. West Texas Intermediate (WTI) crude for June rose $1.02, or 0.9%, to settle at $113.23 on the last day of the first month.

WTI recorded its fourth consecutive week of gains, which it last did in mid-February. Brent has gained around 1% this week after falling around 1% last week.

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The most actively traded WTI contract for July rose about 0.4% to $110.28 a barrel.

“Risks remain tilted to the upside…given China’s reopening and the EU’s continued push for a Russian oil embargo,” said Craig Erlam, senior market analyst at OANDA.

In China, Shanghai reported no changes to its planned end of an extended citywide lockdown on June 1, even as the city announced its first new COVID-19 cases outside quarantine zones. in five days. Read more

The energy market expects the lifting of some coronavirus restrictions in Shanghai to boost energy demand. China is the world’s largest importer of crude.

The EU hopes to strike a deal on a proposed Russian crude import ban, which includes exclusions for member states most dependent on Russian oil, such as Hungary. Read more

“The chances of an EU embargo being declared sooner rather than later have increased following Germany’s success in more than halving Russian oil imports in a very short period of time,” the firm said. BCA Research consultancy in a note.

Big German companies are drawing up a plan to use an auction system to help ration available supplies in case Russia cuts its gas, although some fear it could punish smaller companies. Read more

In the United States, U.S. energy companies added oil and gas rigs this week for the ninth straight week, according to the Baker Hughes rig count, as most small producers react to high prices and market pressures. government to increase production. Read more

The number of rigs is an indicator of future production growth.

Americans have continued to drive even as gas prices at the pump continue to soar. The AAA Automobile Club said national average prices for regular unleaded gasoline hit a record high of $4.59 a gallon on Friday. Read more

India’s crude oil imports in April were the highest in 3½ years as the world’s third-largest oil importer and consumer increased its purchases of discounted Russian oil to fuel the recovery in demand and combat oil spills. high prices.

In Norway, crude production in April exceeded official forecasts by 10.6%, while its gas production was in line with expectations. Read more

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Additional reporting by Noah Browning in London and Sonali Paul in Melbourne; Editing by Marguerita Choy, Susan Fenton and David Gregorio

Our standards: The Thomson Reuters Trust Principles.

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