(Bloomberg) – Oil has been stable amid signs that continued coronavirus blockades in China are weighing on the economy, countering bullish news that protests are cutting off supplies from Libya.
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West Texas Intermediate traded just under $ 107 a barrel after rising the most since early March. China reported its biggest drop in consumer spending and worst unemployment since the first months of the pandemic, while Shanghai reported its first deaths from an ongoing outbreak.
Supplies are taking a hit as Libya faces further supply disruptions after demonstrations against Prime Minister Abdul Hamid Dbayba’s government closed Sharara, the country’s largest oil field, on Monday. Earlier, protesters forced two Libyan ports to suspend loading, with production halted at the El Feel field.
Oil has risen this year as the war in Ukraine destroyed an already tight market, with some traders avoiding Russian crude oil. The jump prompted the United States and its allies to announce the release of millions of barrels of strategic reserves to quell inflationary pressures. OPEC and its partners have refused to increase the pace at which they are restoring production stopped during the pandemic.
Russia’s Deputy Prime Minister Alexander Novak said last week that if more nations ban Russian energy flows, prices could “significantly exceed” historical highs. The United States and the United Kingdom have begun banning crude oil from the country since Moscow invaded Ukraine, and there is pressure on the European Union to follow suit.
“The market is still deciding how much Russian oil can be thrown out of the market,” said Matt Stanley, a trader and broker at Star Fuels in Dubai. “That keeps Brent at about $ 110 a barrel.”
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In a telephone conversation over the weekend, Russian President Vladimir Putin and Saudi Crown Prince Mohammed bin Salman gave a “positive assessment” of their efforts to stabilize the oil market, suggesting a change in production policy is unlikely. The two nations lead an alliance that unites the Organization of the Petroleum Exporting Countries and its partners, known as OPEC +.
Raw commodity markets are the opposite, an upward pattern marked by short-term prices over longer-term ones. Brent’s fast spread – the difference between its two closest contracts – was more than $ 1.10 a barrel in a recovery from a week ago.
The rise in oil this year is part of wider progress in energy commodities, which has seen prices increase profits even as global economic growth prospects diminish. On Monday, US natural gas prices reached their highest level in more than 13 years as stable demand tested the drilling’s ability to expand supplies.
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