By Barani Krishnan
Investing.com – Oil bulls managed to save April from becoming a month of torrid losses as concerns over Russian oil disruption offset downside brought by China’s newest Covid crisis.
Crude prices could see another boost ahead of next week’s OPEC+ meeting, where producer indifference to increasing output could prompt a barrel to test highs of $115 and above.
In Friday’s trade, crude, the London-traded global benchmark for oil, settled up $1.75, or 1.6%, at $109.34 a barrel.
For the week, Brent rose 2.5%. For the month, it rose 1.3%. While it was Brent’s smallest monthly gain since December, it nevertheless ensured an unbroken winning streak over the past five months that gave longs in the global crude benchmark a windfall of 55%.
In New York, the , or WTI, benchmark for U.S. crude settled down 67 cents, or 0.6%, at $104.69 per barrel.
Yet, for the week, WTI rose almost 2%. For the month, it was up 4.4%. Like Brent, WTI has gained every month since the end of November, accumulating a premium of 58% over the past five months.
Oil began this week on a somber note, as a two-day selloff from last week extended into Monday on worries about China’s Covid situation and a at two-year highs that made crude and other commodities more expensive for non-holders of the U.S. currency.
But in three sessions from Tuesday, crude prices reversed from their weakness as concerns over tight supply returned to the fore. Reports on Thursday that Germany will likely lead the European Union in banning Russian oil intensified the rally, as traders vexed over more supply disruptions in already-stressed global energy markets.
Germany used to source 35% of its oil from Russia before the Ukraine invasion and the sanctions against Moscow. Some EU nations, meanwhile, had depended 100% on Russia for their crude needs.
“If Europe is suddenly required to look for huge amounts of gas or oil supplies in international markets, that will offset China’s slowdown fears and send prices higher,” said Jeffrey Halley, a senior market analyst at online trading platform OANDA.
With OPEC+ due to meet on May 4, the market’s upward momentum is expected to last another week at least.
OPEC+, led by the 13-member Saudi-controlled Organization of the Petroleum Exporting Countries and 10 other oil producers steered by Russia, has pushed prices up each time it met over the past year by offering a meager 400,000 barrels per day hike in monthly production — and then not even fulfilling that.