Oil prices jump, demand set to soar for summer as gas prices in San Diego near $6 a gallon

Refinery gas prices
Storage tanks seen at the Los Angeles refinery of Marathon Petroleum, which processes domestic and imported crude oil into gasoline, diesel fuel and other California Air Resources Board (CARB) petroleum products, in Carson March 11. REUTERS/Bing guan

Oil prices rose about 4% on Friday as U.S. gasoline prices hit a record high and China appeared poised to ease pandemic restrictions.

Investors also fear supplies could tighten if the European Union bans Russian oil.

Brent futures rose $4.10, or 3.8%, to settle at $111.55 a barrel. WE West Texas Intermediate (WTI) rose $4.36, or 4.1%, to settle at $110.49.

It was the highest close for WTI since March 25 and its third consecutive weekly gain. Brent fell for the first time in three weeks.

U.S. gasoline futures hit a record high after stocks fell last week for a sixth straight week. That pushed the gasoline crack spread — a measure of refining profit margins — to its highest level since hitting a record high in April 2020 when WTI ended in negative territory.

“There hasn’t been an increase in gasoline storage (in the United States) since March,” said Robert Yawger, executive director of energy futures at Mizuho, ​​noting that demand gas is about to increase when the summer driving season begins on Memorial Day weekend.

AAA said the average price of a gallon of regular self-service gasoline in San Diego County rose Friday for the 10th time in 11 days, rising 1.4 cents to $5.87, a day after increased by half a cent.

Locally, the average price has risen 8.6 cents over the past 11 days, according to figures from the AAA and the Oil Price Information Service.

Across the country, pump prices hit record highs on Friday of $4.43 a gallon for gasoline and $5.56 for diesel. California prices, however, still top the rest of the nation, due to taxes and other factors.

Oil prices have been volatile, supported by worries that a possible EU ban on Russian oil could tighten supplies, but under pressure from fears that a resurgence of the COVID-19 pandemic could reduce the global demand.

“An EU embargo, if fully enacted, could take an estimated 3 million bpd (barrels per day) of Russian oil offline, completely disrupting and ultimately altering global trade flows, causing panic. market and extreme price volatility,” the Rystad Energy analyst said. Louise Dickson.

This week, Moscow imposed sanctions on several European energy companies, sparking supply concerns.

In China, authorities have pledged to support the economy and city officials have said Shanghai will begin easing coronavirus-related traffic restrictions and opening stores this month.

Crude prices rallied on optimism that China’s COVID situation was not getting worse and as risky assets rebounded,” said Edward Moya, senior market analyst at the data firm. and OANDA analysis.

Global stocks rose after a volatile week of trading, pushing up stock indexes in the United States and Europe.

Pressure on oil prices over the week, inflation and rising rates pushed the US dollar to a nearly 20-year high against a basket of currencies, making oil more expensive when is purchased in other currencies.

Another factor influencing oil prices is international relations with Iran.

The EU said there was enough progress to restart nuclear talks, but the US responded by saying it appreciated the EU’s efforts, but said there was no had no agreement or any certainty that an agreement could be reached.

Analysts have said a deal with Iran could add an additional 1 million barrels per day (bpd) of oil supply to the market.

– Reuters and Dispatches

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Felix J. Dixon