Crude oil is on track for a small weekly increase as optimism about demand outweighs concerns about stricter monetary policy and a slowing economy, which have roiled global financial markets.
As of 12:01 p.m. in Singapore, WTI for June delivery was down to $110.85 a barrel on the New York Mercantile Exchange.
WTI for July decreased to $108.61 due to higher volume and open interest.
On the ICE Futures Europe platform, Brent for July settlement fell 0.9 percent to $111.06 a barrel.
After finishing higher on Thursday, West Texas Intermediate dropped below $111 a barrel, and is up 0.3 percent this week. It’s on track for its greatest run since mid-February, with a fourth straight weekly increase.
Global fuel markets are tightening, particularly in the United States, where gasoline and diesel prices have reached record highs in the run-up to the summer driving season. According to an estimate by auto club AAA, nationwide traffic will return to levels observed before the coronavirus outbreak.
As demand recovered from the pandemic’s impact, and Russia’s war on Ukraine sent shockwaves across global markets, the Black Gold rose about 50% this year. While the United States and the United Kingdom have imposed sanctions on Russian exports, shipments to Asia have increased. Even as officials struggle to contain Covid-19 breakouts, China is looking to refill critical supplies with inexpensive Russian oil.
“Crude fundamentals are tightening,” said Zhou Mi, an analyst at Chaos Research Institute in Shanghai, which is linked with Chaos Ternary Futures Co. “Risks are tilted to the upside with an easing of virus outbreaks in China and the peak-demand season in the United States.”
China sent forth contradictory messages on Friday. Shanghai identified the first instances of Covid-19 outside quarantine in six days, raising questions about whether the city’s lockdown may be impacted as banks drop a crucial lending rate for long-term loans to a record low to help a flagging economy.