The West Texas Intermediate (WTI) posted its fourth consecutive weekly gain as commodity markets remain tight amid healthy demand, overshadowing worries about an economic slowdown that have rocked financial markets.
WTI for June delivery rose 0.35% to settle above $110.28 a barrel, after swinging during a session when stocks edged closer to a bear market, weighing on prices.
Despite the choppy trading, it posted its best run of weekly gains since mid-February.
Brent crude for July delivery rose 0.46% to $112.55 a barrel.
Rising demand for fuels and shrinking inventories ahead of the summer driving season highlighted a fundamentally tight supply situation, even as broader economic fears rattled stock markets.
“There continues to be a disconnect between the risk that financial markets associate with raw financial assets and the physical market trying to digest SPR [Strategic Petroleum Reserve] to meet product demand,” said Rebecca Babin, Senior Energy Trader at CIBC Private Wealth Management. “This dichotomy keeps markets fragmented and volatile – it could end up being a cruel summer for energy traders.”
Crude has jumped nearly 50% this year, also helped by Russia’s invasion of Ukraine which sent shockwaves through the markets.
As the US and UK announced bans on Russian exports, flows to Asia increased. China is seeking to replenish strategic stockpiles with cheap Russian oil even as authorities scramble to suppress COVID-19 outbreaks. India also boosted purchases.
There were mixed signals from China on Friday. As banks slashed a key interest rate for long-term loans by a record high to support a slowing economy, Shanghai discovered the first non-quarantine COVID-19 cases in six days. It raises questions about whether the city’s easing of the lockdown would be affected.
Traders are also watching the refined products market closely as a global inventory crisis coincides with the start of the summer driving season.
Additional reports by staff writer
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