West Texas Intermediate (WTI) set its fourth straight weekly gain as product markets remain tight amid healthy demand, eclipsing concerns about an economic slowdown that have roiled financial markets.
WTI for June delivery rose 0.35 percent to settle above US$110.28 a barrel, after fluctuating in a session where equities slid closer to a bear market, weighing prices.
Despite the choppy trading, it posted its best run of weekly increases since the middle of February.
Photo: AFP
Brent crude for July delivery increased 0.46 percent to US$112.55 a barrel.
Rising demand for motor fuels and shrinking inventories ahead of the summer driving season underscored a fundamentally tight supply situation even as broader economic fears shook equity markets.
“There continues to be a disconnect between the risk financial markets associate with crude financial assets and the physical market that is trying to digest SPR [Strategic Petroleum Reserve] releases to meet product demand,” CIBC Private Wealth Management senior energy trader Rebecca Babin said. “This dichotomy keeps markets fragmented and volatile — it could end up being a cruel summer for energy traders.”
Crude has surged almost 50 percent this year, also helped along by Russia’s invasion of Ukraine that sent shock waves through markets.
While the US and UK have announced bans on Russian exports, flows to Asia have picked up. China is seeking to replenish strategic stockpiles with cheap Russian oil even as officials grapple to suppress COVID-19 outbreaks. India has also boosted purchases.
There were mixed signals from China on Friday. While banks cut a key interest rate for long-term loans by a record to bolster a slowing economy, Shanghai found the first cases of COVID-19 outside quarantine in six days. It raises questions about whether the easing of the city’s lockdown would be affected.
Traders are also keeping a close eye on the refined products market, as a a global crunch on inventories coincides with the beginning of the summer driving season.
Additional reporting by staff writer
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