Oil Prices Inch Higher as China Eases Lockdown
Crude oil prices edged higher Friday as China eases some lockdown measures while US gasoline demand is on the rise. Market data indicates that demand was healthy despite higher prices amidst pressures on supply.
Today, West Texas Intermediate crude for June delivery was last seen up US$0.37 to US$112.58 per barrel, while July Brent crude, the global benchmark, was up US$0.08 to US$112.12.
China has eased some of its lockdown measures on Shanghai as the wave of Covid-19 infections in the commercial centre of 25-million abates. The city reopened some public transit this week after seeing no further community spread as it gradually removes quarantine measures that have suppressed oil demand in the No.1 oil importer.
“Crude imports have remained largely stagnant since Q1’21 and current lockdowns have sapped end-user demand and pushed refinery throughput to the lowest level since the onset of the pandemic, down 1.2 mb/d in April,” Michael Tran, commodities strategist at RBC Capital Markets said in a note.
Record US gasoline prices have not suppressed fuel demand in the country, the Federal Highway Administration reported, as miles driven rose to a record 3.27 trillion in the twelve months ending in March. March miles driven exceeded pre-pandemic levels despite high gas prices.
“Currently, the average gasoline price nationwide is just shy of $4.6 per gallon, which constitutes a record level. So far, there is no sign of this having any braking effect on gasoline demand.
“According to the US Department of Energy, demand increased to a good 9 million barrels per day last week, which slightly exceeds the year-on-year level and the five-year average.
“The summer driving season, the period of highest demand, will begin in the US at the end of May,” Commerzbank analyst Carsten Fritsch said in a note. READ: Oil Rises as OPEC Cuts Forecast, China Eases Lockdown
Elsewhere, total miles driven by Americans in March increased by 8 billion from March 2022 levels and rose by 5 billion from pre-pandemic levels in March 2019, Commerzbank said, citing the US Federal Highway Administration. In the 12 months to March 2022, Americans drove a record-high 3.27 trillion miles by car.
Meanwhile, gasoline prices are surging higher as the average gasoline price nationwide has hit around $4.60 per gallon, which is a record level, the bank said. Still, despite the high prices, demand rose to 9 million barrels per day last week, slightly surpassing the year-on-year level and the five-year average, according to the US Department of Energy.
A weaker US dollar and increased optimism about demand as Shanghai gradually emerge from lockdown also lent support to prices, the bank noted. #Oil Prices Inch Higher as China Eases Lockdown