Oil rises as global refining crisis drives up fuel costs

Oil rises as global refining crisis drives up fuel costs

Bloomberg — Oil rose as a global tightening of refined products continued to push fuel prices higher, while Russian diesel exports fell sharply.

West Texas Intermediate (WTI) rose 4.1% on Friday and posted a weekly gain of 0.7% after a series of tumultuous trading sessions in which lower liquidity exacerbated price moves. Russia’s diesel exports fell in April from their pre-war level in Ukraine as oil buyers try to punish one of the world’s biggest suppliers. Investors have also been keeping an eye on China as authorities in Beijing dismissed rumors the city would go into lockdown, even as new Covid-19 cases surged.

Fuels are currently the bullish driver for crude, especially as Russian diesel exports fall, said Dennis Kissler, Senior Vice President of Trading at BOK Financial. “The path of least resistance continues to look higher for all oil products as demand continues to outstrip supply.”

The decline in US fuel stocks on the eve of the summer driving season brings little relief to consumers. US gasoline futures are trading $55 a barrel above crude, the biggest gap in years. Retail gasoline and diesel prices also rose to a new record, according to AAA data on Friday. The International Energy Agency said there is an “almost universal shortage of products”, in your monthly report on Thursday.

On Friday, US gasoline futures hit a new record high, signaling that US drivers are likely to suffer more at gas stations and fueling concerns about inflation in the world’s largest economy.

The oil it has oscillated sharply within a band of about $12 this week. Although the Covid-19 outbreak in China and Russia’s war in Ukraine have contributed to choppy trading since late February, the specter of rising interest rates and runaway inflation have also weighed on sentiment in recent days. risky.


WTI for June delivery rose $4.36 to settle at $110.49 a barrel in New York.

Brent for July delivery rose $4.10 to settle at $111.55 a barrel.

The price differential was US$1.80 in backwardation (when the price of a futures contract is lower than the spot price), down from $1.34 at the start of the week.

Saudi Arabia’s energy minister said it is a shortage of refining, not crude oil, that is causing fuel costs to rise 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, as EU envoy Enrique Mora’s visit to Tehran turned out better than expected, according to the bloc’s foreign policy chief. Expectations that the talks would resume had faded.


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