Crude oil futures Friday traded slightly higher, extending the week’s strong gains as prices hit the highest levels since March amid growing concerns of a supply crunch in the second half of the year.
Front-month July ICE Brent futures were trading at $117.95/barrel (1425 GMT), compared to Thursday’s settle of $117.40/b but off from Friday’s earlier high of $118.73/b after the market was hit by a wave of profit taking during European morning trade.
At the same time, July NYMEX WTI was trading $114.12/b, versus Thursday’s settle of $114.09/b. Brent led the way this week with gains of around 5%, while WTI was up 4%.
A news report by Quantum Commodity Intelligence, an online medium, quoted ANZ commodity strategist, Daniel Hynes, as saying that “crude oil prices extended recent gains as robust demand amid supply shortages continues to tighten the market.”
Hynes noted that despite the EU struggling to reach an agreement on sanctions against Russia’s oil, supplies from what was previously the top producer within the OPEC+ group are set to tighten.
Hungary is said to be looking for an additional three to four years to transition away from Russian oil and while concessions are likely to be offered at next week’s EU showdown, traders are expecting a broader range of sanctions that will make lifting Russian oil even more difficult.
Speaking on the market trend, senior market analyst at brokerage Oanda, Ed Moya, said: “The EU is struggling to get Hungary on board for the required unanimous support needed for a ban on Russian oil. It still seems possible for the ban to get pushed through, but Hungary will need to have favorable terms.”
Gasoline cracks gained nearly $2/b to $46/b and diesel cracks we up $3/b to $42/b, although cracks for naphtha, LPG and fuel oil all retreated by the European close Thursday.
Meanwhile, OPEC+ is set to stick to the existing oil production deal agreed last year at its meeting on June 2 and raise July output targets by a modest 432,000 barrels per day, according to an informal Reuters poll of six OPEC+ delegates.
