Oil extends gains as investors weigh Russian ban, China outlook

Oil advanced for a third day after another tumultuous week of trading as investors weigh the prospect of a European Union ban on Russian crude imports and uncertainty over China’s virus resurgence.

West Texas Intermediate futures rose to trade near $107 a barrel, but are still heading for the first weekly decline in three. Some EU nations said the bloc may have to consider delaying the ban on Russian oil if it can’t get Hungary to agree on the embargo. Beijing authorities have denied rumors that the capital will go into lockdown, as restrictions in Shanghai drag on.

Oil is up more than 40 per cent this year as economies rebound from the pandemic, although China’s outbreak and Russia’s invasion in Ukraine have contributed to choppy trading since late February. Russian crude revenues have soared this year, with the EU the largest market in April, the International Energy Agency said in its monthly report on Thursday.

Investors are also assessing the impact of shrinking American fuel stockpiles ahead of the summer driving season, and the prospect for aggressive monetary tightening after the US consumer-price index for April increased more than analysts were expecting. The crisis in Ukraine has fanned inflation globally.

EU nations said a delay to the Russian oil ban would allow the bloc to proceed with the rest of a proposed sanctions package. Governments are still aiming for a deal on the full package, including a phased-in oil ban, by Monday, when foreign ministers meet in Brussels, according to diplomats.