July 6, 2022

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Aerial view of the Petroineos Ineos petrol refinery in Lavera

Oil surge in tight supply, increase in U.S. refining activity

Brent crude for July was up 48 cents at $ 114.03 a barrel at 10:50 EDT (1450 GMT). US West Texas Intermediate (WTI) crude for delivery in July was up 49 cents, or 0.4%, at $ 110.26 a barrel.

“Brent crude is trading at a very strong uptrend, which is supported by very tight product markets, which again leads to the hunt for mild sweet crude oil, which is naturally high in refined petrol and diesel products,” the Swedish bank SEB said in a statement. A note.

U.S. crude oil supplies fell by 1 million barrels last week, and the government said petrol reserves were declining moderately. Filtering inventory increased by 1.7 million barrels. Refineries increased the processing rate and utilized the utilization rate to 93.2%, the highest number since December 2019. [EIA/S]

As exports of refined goods rose to more than 6.2 million barrels a day last week, refineries had to operate their facilities at full capacity to meet high demand, especially from overseas. More export and a reduction in refining capacity means U.S. petrol stocks are down.

“Refineries continue to burn as much crude oil as they can,” said Phil Flynn, a senior analyst at Price Futures Group. “The market should enter with concern as petrol supply is still tight this holiday weekend.”

This weekend US Memorial Day trips are expected to be the busiest in two years, despite higher fuel prices and increasing fuel demand as more drivers go on the road and shake up controls of the corona virus epidemic.

World crude oil supplies have continued to tighten following the invasion of Ukraine, which Moscow calls a “special military operation,” as buyers boycott Russia, the world’s second-largest exporter.

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Council President Charles Michael said on Wednesday that he hoped the EU would agree on sanctions on Russia’s gradual reduction of oil imports before the next European Council meeting.

Even without a legal ban, with the self-approval of many European companies, a record amount of Russian crude from the Urals was left at sea, while the country struggles to find buyers.

On the other hand, the COVID-19 epidemic is being dealt with severely by China, the world’s largest oil importer. Beijing has imposed new restrictions, while Shanghai plans to impose most restrictions this month.