Home NewsCommodities News Oil extends gains as supply fears outweigh China lockdowns By Reuters

Oil extends gains as supply fears outweigh China lockdowns By Reuters

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Oil extends gains as supply fears outweigh China lockdowns By Reuters

© Reuters. FILE PHOTO: Oil barrels are photographed on-site at Canadian group Vermilion Energy in Parentis-en-Born, France, on October 13, 2017. REUTERS/Regis Duvignau/

Noah Browning

LONDON (Reuters) – Oil prices rose for a fourth day on Friday as worries about supply disruptions in Russia outweighed the impact of the COVID-19 lockdown in China, the world’s top crude importer.

Futures were up $2.21, or 2.1%, at $109.80 a barrel by 1358 GMT, after rising 2.1% in the previous session. The front-month June contract expires later on Friday. The more active July contract rose $1.95 to $109.21.

U.S. West Texas Intermediate crude gained $1.44, or 1.4%, to $106.80 after rising 3.3% on Thursday.

Both contracts are set to end this week and rose for a fifth straight month, helped by the increased likelihood that Germany joins other EU members on an embargo on Russian oil.

“While China’s lockdown measures are having an impact, risks remain tilted to the upside, especially if the EU manages to impose an embargo immediately,” said Craig Erlam, senior market analyst at OANDA.

Despite the impact on the economy and global supply chains, oil prices remained volatile as China showed no signs of easing its lockdown measures.

“Since March, China’s economic indicators have fallen further as full and partial lockdowns have increased. We now expect China’s GDP to slow further in the second quarter,” Zhou Yanting, head of Asia-Pacific economics at Wood Mackenzie, said in a note indicated in.

On the supply side, OPEC+ is likely to stick to its existing deal and agree to another small increase in June when it meets on May 5, six sources in the producer group told Reuters on Thursday.

However, Russia’s oil production could fall by as much as 17 percent this year as Western sanctions over Russia’s invasion of Ukraine hurt investment and exports, an economy ministry document seen by Reuters showed on Wednesday.

Sanctions have also made it increasingly difficult for Russian ships to deliver oil to customers, prompting Exxon Mobil The company (NYSE: ) declared force majeure on its Sakhalin-1 operations and production cuts.

But gains are likely to stall, with prices averaging just under $100 a barrel this year, as economic risks and China’s coronavirus lockdowns offset supply shortages caused by the war in Ukraine, a Reuters poll found on Friday.

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