Oil Heads for Longest Run of Monthly Gains Since Early 2018

(Bloomberg) — Oil is poised to eke out a fifth monthly advance after another tumultuous period of trading that saw prices whipsawed by the fallout of Russia’s war in Ukraine and the resurgence of Covid-19 in China.

West Texas Intermediate futures slipped on Friday to trade near $105 a barrel, but are still up more than 4% this month. The prospect of a European Union ban on Russia crude imports is making gradual progress as the war enters its third month despite diplomatic efforts for a cease-fire.

China’s virus outbreak has added another source of volatility to the market. The nation has extended mass testing to more cities, with lockdowns leading to swelling oil stockpiles and putting the world’s biggest crude importer on track for the largest hit to demand since the early days of the pandemic.

Oil’s fifth monthly gain will be the longest winning streak since January 2018. The war has fanned inflation and led to the U.S. and its allies this month agreeing to a release of strategic crude reserves to try and tame rising energy prices. The invasion has also significantly tightened the diesel market.

remains narrowly backwardated after nearing a bearish contango structure on Tuesday. The global benchmark’s prompt timespread was 33 cents a barrel in backwardation — a bullish pattern — compared with as high as $5.88 in early March, just after the Russian invasion of Ukraine.

©2022 Bloomberg L.P.

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