Oil prices rose early on Wednesday as China's financial hub Shanghai reopened after a two-month strict lockdown, giving hope to oil bulls that Chinese fuel demand will rebound, while fuel inventories in the U.S. are at multi-year lows.
As of 10:35 a.m. EST on Wednesday, WTI Crude was up 1.59% at $116.50 and Brent Crude was trading 1.71% higher at $117.59, as market participants turn bullish on oil again, expecting rising fuel demand in the summer holiday season despite high prices.
In addition, fuel inventories in the United States are lower than the five-year average and at their lowest in years as refinery capacity cannot catch up with pent-up demand post-COVID.
U.S. gasoline prices hit another record high today, at $4.671 per gallon national average, according to AAA data. That's nearly $0.50 higher than the $4.187 national average price just a month ago, and compares to $3.045/gal at this time last year.
"So far, the pent-up urge to travel caused by the pandemic outweighs high pump prices for many consumers," AAA spokesperson Andrew Gross said on Tuesday. "But 67% of drivers recently surveyed told us they would change their driving habits if gas hit $4.50 a gallon. That number rises to 75% at $5 a gallon. If pump prices keep rising, will people alter their summer travel plans? That remains to be seen."
Gasoline prices in the U.S. are set for new records in the coming days as crude oil prices are supported this week by the partial EU ban on Russian oil imports agreed upon late on Monday.
Moreover, the EU and the UK look to implement a coordinated ban on insurance for tankers carrying Russian oil, UK and EU officials told the Financial Times. Considering that the UK is home to the insurance organization International Group of P&I Clubs that covers a whopping 95 percent of tanker liability globally, this move could be a significant blow to Russia's ability to export its oil.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More