Brent crude rose to levels not seen in two months on Monday, as easing of COVID restrictions in China’s biggest cities sparked renewed demand hopes.
US markets will be closed Monday for Memorial Day.
Read: Here are all the market closures for Memorial Day
West Texas Intermediate crude for July delivery CL.1,
rose 61 cents, or 0.5%, to $115.65 a barrel. On Friday, WTI rose 0.9% to close at $115.17 a barrel on the New York Mercantile Exchange, the highest close for a front-month contract since March 11, according to Dow Jones Market Data. It was the fifth straight week of gains for the US benchmark, which rose 4.3%.
July Brent Crude Oil BRN00,
rose 50 cents, or 0.6%, to $120.03 a barrel, a level not seen since early March. On Friday, Brent on ICE Futures Europe closed 1.7% higher at $119.43 a barrel, its highest front-month close since March 25.
July petrol RBM22,
rose 0.4% to $4.0333 a gallon during HOM22 fuel oil in June,
rose less than 0.1% to $4.005 a gallon.
July natural gas fell NGN22,
rose 1.1% to $8.831 per million British thermal units.
Soaring Brent prices came after Beijing eased pandemic restrictions and declared a recent outbreak under control on Sunday. Officials have also gradually eased restrictions in Shanghai, which has suffered a two-month lockdown. China is the world’s largest oil importer and the market has been concerned about falling demand for the commodity.
“Having broken the resistance and support zone at $115, Brent could now target $124,” Ole Hansen, head of commodity strategy at Saxo Bank, told clients in a note.
Not everyone is so optimistic. Commerzbank recently raised Brent oil prices to between $100 and $115 a barrel in the current quarter, but sees a decline in the second half of the year. They see western oil reserves released and increased buying of Russian oil by India and China to cushion the loss of Russian oil supplies to Europe, which could potentially weigh on prices.
The already more liquid August Brent contract was trading at around $116 a barrel, also at a two-month high, Commerzbank analyst Carsten Fritsch noted in a note to clients Monday.
While optimism surrounding China’s COVID outbreak has pushed Brent up around 6% since the middle of last week, the risk of renewed lockdowns remains a risk for oil, he said. With China “ready to lockdown entire megacities in response to even small outbreaks… it is therefore too early to give the all-clear.”
A new catalyst for energy markets could come this week when Organization of Petroleum Exporting Countries members and non-members, including Russia, hold a virtual meeting to discuss production plans.
Meanwhile, EU ministers will return to the table in Brussels on Monday to discuss a possible ban on Russian oil as punishment for invading Ukraine nearly four months ago. This is a day after ministers failed to reach an agreement. A compromise that only affects sea transport, but not deliveries via pipelines, has met with resistance in Hungary, Fritsch noted.
“If such a watered-down oil embargo is introduced, Russia is unlikely to find it too difficult to sell its oil to other consumers, particularly in Asia, meaning the impact on the oil market is likely to be limited. All in all, the recent price surge seems exaggerated to us,” added Fritsch.
The U.S. benchmark’s highest reading in more than 11 weeks on Friday came as the summer driving season got underway over Memorial Day weekend and inventories remain at low levels. Heading into the holiday season, the average retail price for regular gasoline in the US was $4.59 a gallon), the highest inflation-adjusted (real) price since 2012, the company said US Energy Information Administration.
Read: Sky-high gas prices aren’t stopping Americans from hitting the road this summer
https://www.marketwatch.com/story/brent-crude-hits-two-month-high-as-china-lifts-covid-restrictions-analyst-predicts-124-barrel-is-next-11653905939?rss=1&siteid=rss Brent crude hits two-month high as China lifts COVID restrictions. Analysts are forecasting $124/barrel next.