Oil prices fluctuated in a tight trading range during the week ending April 29, ultimately rising by 4% on average as investors kept tabs on the course of sanctions on Russian oil and gas, although fears of a COVID-19 lockdown in the Chinese capital curtailed prices rising further.
Brent crude was trading at $108.51 per barrel at 1122 GMT on Friday, posting a 3.71% gain from the Monday session that opened at $104.62 a barrel.
American benchmark West Texas Intermediate (WTI) registered at $106.29 per barrel at the same time on Friday, increasing 4.84% relative to the opening price of $101.38 a barrel on Monday.
The ongoing lockdown since March 28 in Shanghai, the largest city in China and one of the most important financial centers in Asia, has been extended indefinitely throughout the city due to increasing omicron variant cases. The lockdown has interrupted logistics management and supply chains -- the lifeblood of trade worldwide and the Chinese economy. Following the rise in cases, the capital Beijing also began mass testing for millions of residents.
Tough COVID-19 mitigation measures in the world’s second-largest, oil-consuming country prompted fears of weak demand, bringing oil prices down.
Furthermore, expectations of an announcement of a half-point interest rate hike at the meeting of the US Federal Reserve in May to bring inflation down to its 2% goal also put pressure on oil prices.
A higher interest rate means a higher US dollar rate, making oil more expensive for buyers holding other currencies.
Meanwhile, the dollar index, which measures the value of the American dollar against a basket of currencies, including the Japanese yen, British pound, Canadian dollar, Swedish krona, and Swiss franc, hit 103.67 on Thursday, rising more than 4.4% month-on-month.
Supply fears in an already tight oil and gas market increased after Russian energy giant Gazprom announced the suspension of gas deliveries to Bulgaria and Poland. Russia halted gas flows because of the refusal of both countries to switch to a new payment system for gas imports requiring a bank account in Gazprombank where payments in euros or dollars would be converted to rubles.
Poland said it is prepared for this course of events, while Greece vowed to help neighboring Bulgaria following the Russian decision to cut off its gas supply.
Oil prices increased on Friday following reports that Germany could consent to an embargo on Russian hydrocarbon products.
However, despite its position as a top importer of Russian fossil fuels, paying an estimated €9.1 billion, Germany had vowed to gradually slash its coal imports by half by the end of autumn after cutting oil imports from June.
By Sibel Morrow