As The US Driving Season Approaches, So Does Oil Shortage
Oil prices rose on Monday, helped by strong demand in the United States, limited supply, and a little lower dollar. Shanghai prepared to reopen after a two-month lockdown that fueled fears of a severe slowdown in growth.
At 0408 GMT, Brent crude futures were up 72 cents to $113.27 a barrel; meanwhile, WTI crude futures were up 53 cents, or 0.48 percent, to $110.81 a barrel; it added to last week’s moderate gains for both commodities. “Oil prices are supported as gasoline markets remain tight amid strong demand heading into the peak driving season in the United States,” said Stephen Innes, managing partner of SPI Asset Management. “Typically, refineries are ramping up to meet the unquenchable demand of American drivers at the pump.”
More Fluctuations in Energy Markets
The peak driving season in the United States generally runs from Memorial Day weekend in late May through Labour Day in September. There were concerns that rising gasoline prices would dampen demand; hence, analysts said mobility data from TomTom and Google (NASDAQ: GOOGL) had risen in recent weeks; this indicated that more people were on the roads in locations like the United States. Oil rose on Monday due to a lower US dollar, making petroleum cheaper for purchasers holding foreign currencies. Concerns over China’s efforts to strangle COVID with lockdowns have stifled market gains, even as Shanghai prepares to resume on June 1.
Lockdowns in China, the world’s top oil importer, have harmed industrial output and construction; they had to take measures to bolster the economy, including a larger-than-expected decrease in mortgage rates last Friday. “COVID-19 lockdowns are a temporary drag on demand in China, but demand elsewhere is holding up nicely,” according to analysts. “As stimulus measures kick in, we expect industrial activity to rise,” ANZ noted. The European Union’s inability to get a definitive agreement on banning Russian oil for its invasion of Ukraine has also kept oil prices from skyrocketing.
