U.S. West Texas Intermediate crude oil futures are trading nearly flat on Friday, while continuing to hover near its more than two-month high. Helping to underpin prices is the prospect of a European Union (EU) ban on Russian energy products and expectations of tighter U.S. gasoline supplies.
Two Factors Attracting the Most Attention
The focus for traders this week has been supply. And two events have garnered most of the attention: The possible ban on Russian crude exports and the significant tightness in U.S. product inventories.
The EU may announce the ban on May 30 at nearly the same time the U.S. begins its high demand summer driving season. Both moves will tighten supply.
But there is a third factor developing. Bullish traders are hoping China starts to lift its COVID-related restrictions while at the same time announcing more measures to support the economy. This could give demand a much-needed boost.
EU Waiting for Hungary’s Approval
Early next week, the European Commission will try to obtain the unanimous support of all 27 EU member states for its proposed new sanctions against Russia. However, Hungary isn’t quite on the same page as the other 26 members.
According to Reuters, a top Hungarian aide said the country needed 3-1/2 to 4 years to shift away from Russian crude and make huge investments to adjust its economy. Hungary could not back the EU’s proposed oil embargo until there was a deal on all…