Oil gains as Europe moves closer to ban Russian crude

Bloomberg

Oil prices edged higher on Friday and headed for the first back-to-back weekly gain in two months on signs the market is tightening as the European Union moved towards banning Russian crude.
West Texas Intermediate futures traded near $109 a barrel, and were on track to be up more than 3% this week. The EU intends to ban Russian crude in six months and oil products by the end of the year to punish Moscow for its war on Ukraine. The bloc has proposed giving Hungary — which has pushed back against an embargo — and Slovakia an extra year to comply.
“In the near term, the fundamentals for oil are bullish and it is only fears of an economic slowdown in the future that is holding us back,” said Phil Flynn, senior market analyst, Price Futures Group. “Tougher sanction on Russia looks to be more bullish as the EU is moving closer to cut off Russian oil and the US moves to further clamp down on Russia,” he said.
The US government said that it would begin buying crude to replenish the nation’s reserve. While the process could begin in the fall, the actual deliveries won’t take place until sometime later in the future.
Oil has rallied more than 40% this year as the invasion of Ukraine upended commodity markets. This week’s advance — the third in the past four — has come despite lingering concerns that lockdowns in China to combat Covid-19 outbreaks are hurting consumption. While the Organisation of Petroleum Exporting Countries and its allies did announce another modest increase in supply, there’s doubt the alliance will be able to deliver the full volume.
Oil-product markets have also shown signs of strength this week, especially in the US, where nationwide holdings of gasoline and diesel have dropped. Gasoline futures are trading near a record high after a weekly gain of about 6%.