Oil prices went up by 4% on Friday as U.S. gasoline prices jumped to a record high, China looked ready to relax the restrictions and investors worried that supplies will tighten if the European Union bans Russian oil.
Brent futures went up $4.10, or 3.8%, to settle at $111.55 a barrel. US West Texas Intermediate WTI crude rose $4.36, or 4.1%, to settle at $110.49.
It was the highest close for the WTI since March 25 and its third weekly rise. The price of the currency fell for the first time in three weeks.
The U.S. gasoline futures went to an all-time high after stockpiles fell for a sixth week in a row. That boosted the gasoline crack spread, which is a measure of refining profit margins - to its highest since it hit a new record in April 2020, when WTI finished in negative territory.
Since March, there has not been an increase in US gasoline storage, said Robert Yawger, executive director of energy futures at Mizuho, noting gasoline demand is poised to spike when the summer driving season starts on the U.S. Memorial Day holiday weekend.
The US 3: 2: 1 crack spread another measure of refining margins that includes gasoline and diesel, and rose to a new record, according to Refinitiv data going back to May 2021.
Automobile club AAA said that US prices at the pump were record highs on Friday, of $4.43 per gallon for gasoline and $5.56 for diesel.
Concerns about a possible EU ban on Russian oil could tighten supplies, but pressured by fears that a resurgence of COVID-19 pandemic could cut global demand, has led to volatile oil prices.
An EU embargo, if fully enacted, could take 3 million barrels of Russian oil offline, which will disrupt global trade flows and cause market panic and extreme price volatility, according to Rystad Energy analyst Louise Dickson. The sanctions were imposed on several European energy companies this week, which caused concerns about supplies. In China, officials pledged to support the economy, and city officials said that Shanghai would start to relax coronaviruses traffic restrictions and open shops this month.
Edward Moya, senior market analyst at data and analytics firm OANDA said that Crude prices rallied on optimism that China's COVID situation was not worsening and as risky assets rebounded.
After a volatile week of trading, global shares went up, pushing up stock indexes in the United States and Europe.
Inflation and rate increases drove the US dollar to rise as a result of pressure on oil prices during the week.
The EU said there was enough progress to relaunch nuclear negotiations with Iran. The US said it appreciated the efforts of the EU, but said there was no agreement yet and no certainty that one might be reached.
Another 1 million barrels of oil supply could be added to the market by an agreement with Iran, according to analysts.
In April, 12 lakh tons were produced.