Oil set for seventh weekly gain as traders weigh China’s return

Oil headed for a seventh weekly gain as investors weigh a tightening global market and the return of China from virus curbs.

West Texas Intermediate futures were steady near $121 a barrel on Friday and up around 2 per cent for the week. The market has tightened as rebounding demand coincides with upended trade flows from Russia after the crisis in Ukraine.

Consumption in top importer China is expected to rise as it lifts strict Covid restrictions, but a new Shanghai lockdown signals a bumpy recovery.

Oil has maintained its upward momentum this year through extreme bouts of volatile trading following the Russia-Ukraine crisis in late February. Goldman Sachs Group this week boosted its price forecasts into 2023, while OPEC warned that most members are “maxed out” on crude production.

US gasoline stockpiles are at the lowest seasonal level since 2014 as the nation ramps up its summer driving season, typically a peak period for consumption. However, drivers are facing record pump prices that keeping climbing, which is starting to lead to some demand destruction.

While China is reinstating virus lockdowns in parts of Shanghai, the world’s biggest crude importer is broadly lifting its restrictions. Top producer China National Petroleum Corp. this week forecast rising oil demand in the third quarter, but cautioned of further disruptions from Covid-19 outbreaks.