(Bloomberg) — Oil climbed, bookending another tumultuous week of trading, as investors weighed the prospect of a European Union ban on Russian crude and uncertainty over China’s virus resurgence.
West Texas Intermediate rose 2.7% while gasoline futures hit a record high. Some EU nations said the bloc may have to consider delaying a proposed oil embargo if it can’t get Hungary to agree to it. Meanwhile, authorities in Beijing denied rumors that the city will go into lockdown even as new Covid-19 cases climbed.
Investors are also assessing the impact of shrinking American fuel stockpiles ahead of the summer driving season. Gasoline futures in the U.S. are trading $55 a barrel above crude, the widest gap in years. Retail prices of the motor fuel also climbed to a fresh record, AAA data showed Friday.
Oil has swung sharply within a band of about $12 this week. Although China’s virus outbreak and Russia’s war in Ukraine have contributed to choppy trading since late February, in recent days the specter of higher interest rates and rampant inflation have also weighed on risk sentiment.
“The rollercoaster ride shows no signs of stopping,” said Stephen Brennock, an analyst at PVM Oil Associates. “At the forefront of the oil market — and the broader risk-asset complex for that matter — are growing fears of an inflation-driven global recession.”
WTI for June delivery rose 2.7% to $108.97 a barrel on Friday, while futures were down 0.8%. Brent for July settlement gained 2.5% to $110.12 a barrel. The prompt time spread was $1.68 in backwardation, compared with $1.34 at the start of the week.
Saudi Arabia’s energy minister said that a refining crunch — rather than any shortage of crude — is driving the surge in fuel costs to unprecedented levels. He added that the world is running out of energy capacity at all levels.
There was also a glimmer of hope on Friday in efforts to revive the Iran nuclear deal, with EU envoy Enrique Mora’s visit to Tehran going better than expected, according to the bloc’s foreign policy chief. Expectations had been fading that talks would resume.
