Crude oil futures, except West Texas Intermediate (WTI), snapped two-week winning streak on fears that resurgent Covid-19 pandemic in China and a delay in European sanctions on Moscow’s energy exports can cut global demand.
Brent, the international benchmark for two-thirds of the world’s oil, fell for the first time in three weeks. Brent came down by $0.84 (-0.75 percent) to $111.55 from $112.39 on a week-on-week (WoW) basis. The West Texas Intermediate (WTI), the main oil benchmark for North America, went up by $0.72 a barrel (+0.66 percent) to $110.49 from $109.77 on a weekly basis. That has been the highest close for WTI since March 25 and its third straight weekly rise.
The price for Opec Basket decreased from $113.04 to $109.30 on a week-on-week basis, showing a decrease of $3.74 (-3.31 percent). The OPEC Reference Basket of Crudes (ORB) is made up of Saharan Blend, Girassol, Djeno, Zafiro, Rabi Light, Iran Heavy, Basra Light, Kuwait Export, Es Sider, Bonny Light, Arab Light, Murban and Merey.
The price of Russian Sokol decreased by $2.19 (-2.19 percent) to $97.62 from $99.81 on WoW basis. Similarly, Arab Light prices witnessed a decrease of $7.14 (-6.21 percent) to reach $107.90 from $115.04 a barrel on a weekly basis.
Overall, oil prices remained lower during the week, though a 4 percent rise on the last trading session of the week trimmed the overall losses and even pushed WTI from red to green territory as US gasoline prices jumped to a record high, China looked ready to ease pandemic restrictions and investors worried supplies will tighten if the European Union bans Russian oil.
Pressuring oil prices during the week, inflation and interest rate rises drove the US dollar to a near 20-year high against a basket of currencies, making oil more expensive when purchased in other currencies. This factor also kept the oil prices in check.
The imposition of Covid-19 curbs in parts of China, the world’s second largest economy and the top importer of oil, weighed on crude prices, limiting further gains. China has introduced strict movement curbs in Shanghai, its largest city, to control the spread of the pandemic. New cases have also been detected in the capital Beijing as the government continues to carry out mass testing to isolate every infected person as part of its “zero-Covid” strategy.
The European Union’s (EU) proposal to ban imports of all Russian crude and oil products by the end of the year seems unlikely. Some member states are strongly dependent on Russian oil. Some EU members, most notably Hungary, are pushing against a full embargo on Russian oil, and talks among member states continue as they look to reach a consensus since the Commission’s proposal requires the approval of all 27 EU countries. The proposal is yet to be officially approved by the EU Parliament.
The European Union (EU) also said there is enough progress to relaunch nuclear negotiations with Iran. The US said it appreciates the EU’s efforts but there is no agreement yet and no certainty that one might be reached. An agreement with Iran could add another one million barrels per day of oil supply to the market.
