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Oil rises on EU’s Russian oil ban effort, demand hopes By Reuters

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Oil rises on EU's Russian oil ban effort, demand hopes By Reuters

© Reuters. FILE PHOTO: Oil pump jacks are seen at the Vaca Muerta shale oil and gas deposit in Argentina’s Neuquen Patagonia province on January 21, 2019. REUTERS/Agustin Marcarian

Alex Lawler

LONDON (Reuters) – Oil prices hit a seven-week high on Tuesday, boosted by the European Union’s continued push to ban Russian oil imports to tighten supplies, while investors focused on higher demand from China’s easing of coronavirus lockdowns.

On Monday, EU foreign ministers failed to press Hungary to lift its veto over a proposed oil embargo. But some diplomats are now pointing to the May 30-31 summit as an opportunity to reach a deal on a phased ban on Russian oil.

It rose to $115.69, its highest level since March 28, and was up 24 cents, or 0.2 percent, at $114.48 by 1330 GMT. However, U.S. West Texas Intermediate (WTI) crude was down 3 cents at $114.17.

“Oil prices have held near multi-week highs this week, supported by soaring U.S. gasoline and distillate prices, and concerns over the European Union’s ban on Russian oil imports are still in play,” said Jeffrey Halley, an analyst at brokerage OANDA.

Crude prices surged in 2022 as Russia’s invasion of Ukraine exacerbated supply concerns, with Brent hitting $139 in early March, its highest level since 2008.

Oil also found support from hopes of a recovery in Chinese demand as it eases COVID restrictions and rising geopolitical tensions between the European Union and Russia after Sweden and Finland joined NATO, analysts said.

Further data showed that OPEC and allies including Russia produced well below levels required in April in a deal aimed at gradually easing record cuts in 2020 at the height of the pandemic.

“At the end of the day, it’s a supply-side story,” said City Index analyst Fawad Razaqzada. “Unless OPEC and its allies ramp up production quickly, it’s hard to see how prices can fall meaningfully.”

Another focus is that U.S. fuel inventories may fall further. The weekly inventory report is expected to show a rise in crude oil inventories and a drop in distillate and gasoline inventories. [EIA/S]

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