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: Oil hits nearly 8-week high as gasoline prices continue record run

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Oil futures rose Tuesday, as gasoline continued to push into record territory and China was seen easing lockdown rules.

Price action
  • West Texas Intermediate crude for June delivery
    CL.1,
    +0.75%

    CL00,
    +0.75%

    CLM22,
    +0.75%

    rose 96 cents, or 0.8%, to $115.16 a barrel on the New York Mercantile Exchange, after trading at the highest intraday level for a most actively traded contract since March 24, according to FactSet.
  • July Brent crude
    BRN00,
    +0.88%

    BRNN22,
    +0.88%
    ,
    the global benchmark gained $1.14, or 1%, to $115.38 a barrel, hitting its highest intraday price since March 28.
  • June gasoline
    RBM22,
    +0.39%

    rose 0.5% to $4.0435 a gallon after closing at a record on Wednesday. June heating oil
    HOM22,
    +0.25%

    was up 0.8% at $3.939 a gallon.
  • June natural-gas futures
    NGM22,
    +4.55%

    jumped 4% to $8.277 per million British thermal units.
Market drivers

Crude has gained ground as gasoline, buoyed by falling inventories over the past several weeks, continued its rally. While implied demand for gasoline has fallen, summer driving season, which begins Memorial Day weekend, is around the corner. Tight supplies of distillates, which have also led to soaring diesel prices, have also moved to underpin crude.

Meanwhile, the easing Monday of some lockdown restrictions in Shanghai, China’s largest city, have also helped boost crude, analysts said.

“The lockdown in Shanghai, which has been in place since the end of March, has weighed considerably on oil demand. Crude oil processing in China dropped to 12.6 million barrels per day in April, which was the lowest level since March 2020, i.e. during the first coronavirus lockdown,” said Carsten Fritsch, commodity analyst at Commerzbank, in a note.

Upside for oil may be limited, however, by uncertainty over the European Union’s effort to impose a ban on imports of Russian crude in the face of continued resistance from Hungary. The ban requires unanimous approval of the EU’s 27 members.

A meeting of EU foreign ministers on Monday failed to achieve an agreement, with talks sent back to the ambassador level, news reports said. A May 30-31 summit may offer the best opportunity for an agreement, analysts said.

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