Oil prices steady amid prospect of increase in Chinese demand in week ending May 20
Oil edges higher as EU focuses on finalizing proposed ban on Russian crude
Oil prices were mainly steady on Friday as loosening of COVID-19 restrictions in China helps fuel demand and the impending EU ban on Russian crude jeopardizes stability of the global demand and supply balance.
International benchmark Brent crude opened trading day at $114.24 on Monday but dropped to $112.41 at closing as European countries failed to come to a unanimous understanding of how to enact a ban on Russian crude exports.
American benchmark West Texas Intermediate (WTI) ended the day at $107.37 on Monday after starting at $107.20.
On the last trading day of the week, the news flow from China shows its effect on the market. The record cut in loan interest rates in China reduced the economic concerns in the markets to some extent. However, the detection of COVID-19 cases outside the quarantine zones in Shanghai, which was struggling with the epidemic, brought up the concerns about the measures again.
In Shanghai, which has entered the 8th week of the quarantine measures implemented due to the pandemic triggered by omicron cases in China, one of the world's largest oil consumers, manufacturing, construction and trade companies carry out their activities under closed-circuit epidemic protection measures.
China on Friday cut a key interest rate for long-term loans for the second time this year as part of a push to overcome the impact of stringent COVID-19 lockdowns and a downturn in the property sector.
The five-year loan prime rate, a reference for mortgages, was lowered by 15 basis points to 4.45% from 4.6%, the People's Bank of China said in a statement.
In addition, Iran is having difficulties in selling its crude as more Russian oil is available and Iranian crude exports to China declined sharply since the start of the Ukraine war as China buys discounted Russian oil.
Meanwhile, the European Commission issued new guidance on Tuesday on how EU companies can pay for Russian gas in rubles without violating the bloc's sanctions.
On Wednesday, European Commission head Ursula Von der Leyen unveiled a €300 billion ($315 billion) plan to end Europe's reliance on Russian energy. She outlined a three-step plan, called Repower EU, which focuses on the demand side, supply side and accelerating the clean energy transition.
A possible European ban on Russian oil imports is still being discussed within the respective EU bodies and negotiations are going on between the member states.
Oil prices closed at $112.04 on Thursday and rose on Friday to around $112.34 at 1226 GMT.
WTI was at $109.80 per barrel at the same time after the previous session closed at $109.89 a barrel.