Oil Holds Near $105 as Demand for Fuels Offsets China Lockdowns

(Bloomberg) — Oil held above $105 a barrel as investors weighed higher demand for refined products against a slew of lockdowns in major cities in China.

West Texas Intermediate futures were little changed in early Asian trade after closing 0.5% higher on Monday. Record fuel exports from the U.S. Gulf Coast are draining local supplies, pushing diesel margins to a fresh high. The tightness reflects higher global demand for fuels, especially from Latin America, as supply remains low on the shunning of Russian cargoes. 

Oil has been grappling with a tumultuous period of trading since Russia’s invasion of Ukraine in late February. Prices on Monday initially retreated as Beijing and Shanghai implemented stringent measures to contain a widespread Covid-19 outbreak, stoking concerns over demand. 

Crude climbed for a fifth month in April, marking the longest monthly winning streak since January 2018. Still, concerns over an economic slowdown, persistently high inflation and an increasingly aggressive tightening rhetoric by Federal Reserve officials have continued to rattle the market, leaving prices vulnerable to big swings.  

remains in backwardation, a bullish structure where near-dated contracts are more expensive than later-dated ones. The benchmark’s prompt timespread closed at $1.61 a barrel in backwardation on Monday, compared with a high of $3.88 on March 8.

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