Oil end the week higher on supply risks

Oil end the week higher on supply risks

Oil prices ended the week slightly higher on Friday as a planned European Union ban on Russian oil and easing of COVID-19 lockdowns in China countered concerns that slowing economic growth will hurt demand.

Brent 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 its on its last day as the front-month.

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WTI notched its fourth straight week of gains, which it last did in mid-February. Brent gained about 1% this week after falling about 1% last week.

The more actively-traded WTI contract for July was up about 0.4% to $110.28 a barrel.

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In China, Shanghai did not signal any change to its planned end of a prolonged city-wide lockdown on June 1 even though the city announced its first new COVID-19 cases outside quarantined areas in five days.  

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

The EU is hoping to clinch a deal on a proposed ban of Russian crude imports which includes carve-outs for member states most dependent on Russian oil, such as Hungary.  

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German big business is drafting a plan to use an auction system to help ration available supplies in the event Russia cuts off its gas, although some fear it could punish smaller firms.

In the United States, U.S. energy firms this week added oil and natural gas rigs for a ninth week in a row, according to the Baker Hughes rig count, as mostly small producers respond to high prices and prodding by the government to ramp up output.

In India, crude oil imports in April were the highest in 3-1/2 years as the world’s third biggest oil importer and consumer ramped up discounted Russian oil purchases to fuel demand recovery and fight high prices.

In Norway, crude output in April missed official forecast by 10.6%, while its gas production was in line with expectations.  

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