Title: Oil Up, but China Fuel Demand Concerns Remain
Apr 29, 2022 12:54AM ET
Oil prices rose in Asia Friday morning, but lingering COVID-The 19 suspensions dampened fuel demand in China ahead of a long holiday. However, fears that Western sanctions will hurt crude and product exports from Russia are supporting prices.
After rising 2.1% in the previous session, Brent oil futures were up 0.82% at $108.14 by 12:48 p.m. ET. As the June front-month contract expires later in the day, the more active July contract fell 30 cents to $106.96 a barrel. WTI futures rose 0.52% to $105.91 after gaining 3.3% on Thursday.
Both the Brent and WTI contracts are set to end the week and month higher, with WTI on track for five straight months of gains. The increased likelihood that Germany will join a Russian oil embargo boosted black oil prices.
Still, oil prices have been volatile as China's COVID-19 shutdowns continue despite the negative impact on the economy and global supply chains.
In terms of supplies, the Organization of the Petroleum Exporting Countries and its Allies (OPEC+) is unlikely to change its existing supply agreement too much. Six OPEC+ sources told Reuters on Thursday that the cartel is likely to agree to another small production increase for June at its May 5 meeting.
However, Russian oil production could fall by up to 17% by 2022, according to a Wednesday document from the Ministry of Economic Development obtained by Reuters. Western sanctions imposed on Russia over its invasion of Ukraine on Feb. 24 have also affected investment and exports.
The sanctions are making it increasingly difficult for Russian vessels to deliver oil to customers. For example, Exxon Mobil Corp. recently declared force majeure on its Sakhalin-1 operations and cut production.