Oil prices escalated again today with the market showing that it expects an EU embargo on Russian crude, offsetting concerns about low demand in China.
In particular, with prices rising in the last hours of trading and while for most of the day they were moving with marginal fluctuations, the Brent July contract closed with an increase of 2.41% or $ 2.69 to $ 114.24 a barrel .
Similarly, the contract of the American WTI completed at $ 114.2 the barrel with a jump of 3.4% or $ 3.71.
Initially, prices were moving slightly downwards today, with Commerzbank analyst Barbara Lambrecht explaining that it was due “mainly to China’s weak financial performance, as lockdowns have a direct impact on the world’s second-largest market”.
In particular, retail sales in China fell by about 11.1% compared to the previous year, a percentage that is the largest decline since March 2020 and higher than estimated.
Factory output also fell 2.9% from a year earlier, dampening expectations for a rise and the biggest drop since February 2020.
However, oil prices have found support for the looming EU embargo on Russian crude, as European officials and diplomats express optimism about an impending agreement between member states.
Which, however, did not happen today, as Hungary again refused to consent to the measure.
However, the gap seems to be narrowing with more and more European officials saying that reaching an agreement is a matter of days.
As Naohiro Niimura of Market Risk Advisory points out, “with the emerging European embargo on Russian oil slowing OPEC output growth, prices are expected to remain in the $ 110 a barrel range.”
It is worth noting the prolonged rally in US gasoline prices, which hit a record high today, putting pressure on the WTI as increased demand comes amid limited supply.