By Peter Nurse
Investing.com -- Oil prices were largely unchanged Friday, on course to end the week basically flat as traders attempt to balance out tentative hopes for the end of Shanghai’s COVID-19 lockdown with concerns over the global demand outlook.
By 9:25 AM ET (1325 GMT), U.S. crude futures traded 0.1% higher at $109.92 a barrel, while the Brent contract rose 0.1% to $112.09 a barrel.
U.S. Gasoline RBOB Futures were up 0.4% at $3.8470 a gallon.
Oil has surged over 40% this year as demand recovered from the impact of the pandemic and Russia’s assault on Ukraine roiled global markets.
However, confidence in the economic recovery has waned over the last few weeks as rampant inflation has provoked central banks to tighten monetary policy while a number of Chinese cities, Shanghai in particular, were shut down to combat a persistent COVID outbreak.
Authorities started to ease Shanghai’s lockdown earlier this week after the city went three days of zero community transmission, but many restrictions remain in place and a large number of the city’s population is still confined to their abodes.
Helping the tone has been strong demand for the fuel product markets, especially in the US, where gasoline and diesel prices have risen to unprecedented levels in the run-up to summer driving season.
Data from the Federal Highway Administration, released Thursday, showed that U.S. motorists drove 277.4 billion miles in March, 5 billion miles more than the numbers seen in March 2019, before the pandemic restrictions were put in place.
The other factor in play has been the expectation that the European Union will agree a deal banning the importation of Russian crude, even in the face of opposition from countries most dependent on Russian oil such as Hungary.
“While it is taking longer than expected to come to an agreement, we believe that member states will eventually come to a deal,” said analysts at ING, in a note. “How much of an impact this will have on the market will depend on how watered down the final agreement is relative to the proposal.”
Even if the EU does finally come up with a proposal that all of the member countries can get behind, it’s debatable how much of Moscow’s oil will be removed from the global market as China appears to be ramping up purchases of oil from Russia at bargain prices.
China's seaborne Russian oil imports will jump to a near-record 1.1 million barrels per day in May, up from 750,000 barrels per day in the first quarter and 800,000 barrels in 2021, according to an estimate by Vortexa Analytics.
The number of U.S. oil rigs by Baker Hughes and CFTC positioning data are scheduled for release later in the session, rounding off the week.