By William Watts
Oil futures erased early losses, ending strongly higher Monday as tight supplies allowed gasoline to continue a push into record territory.
Investors also weighed a loosening of COVID-19 restrictions in Shanghai versus economic data that underlined demand fears tied to the nation’s lockdown policies.
Price action
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West Texas Intermediate crude for June delivery /zigman2/quotes/211629951/delayed CL.1 +1.34% /zigman2/quotes/209723049/delayed CL00 +1.34% rose $3.71, or 3.4%, to close at $114.20 a barrel on the New York Mercantile Exchange.
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July Brent crude , the global benchmark, gained $2.69, or 2.4%, settling at $114.24 a barrel on ICE Futures Europe.
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June natural gas rose 3.8% to finish at $7.956 per million British thermal units.
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June gasoline jumped 1.6% to close at $4.0229 a gallon after ending Friday at a record, while June heating oil fell 0.4% to $3.9075 a gallon.
Market drivers
Oil futures surged over 4% on Friday to turn positive for the week. The push higher by the petroleum complex was led by gasoline futures, which ended at a record. Gasoline extended its push into record territory on Monday.
“The continuous inventory withdrawal over the past few weeks has pushed U.S. gasoline stocks to levels significantly below the five-yr average at this point in the season and reflects acute supply tightness,” said Warren Patterson, head of commodities strategy at ING, in a note. “Refineries increased operating rates last week to improve supply; however, a shortfall persists.”
Earlier weakness was tied to the economic data out of China. The National Bureau of Statistics said that retail sales fell 11.1% on year in April, widening from a drop of 3.5% in March. Economists polled by The Wall Street Journal had looked for a 5.4% decline. China’s industrial production also unexpectedly dropped, falling 2.9% from a year earlier in April, after a 5% on-year increase in March, coming in well below the 1% growth anticipated by surveyed economists.
Concerns around China and its consumption levels have served as a partial counterweight to supply worries that have been amplified by Russia’s invasion of Ukraine. Meanwhile, Shanghai allowed supermarkets, malls and restaurants to reopen in limited capacity on Monday.
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