U.S. oil futures ended a choppy session near unchanged Monday, as investors weighed uncertain prospects for a European Union ban on Russian energy imports and tight domestic fuel supplies, while the White House said President Joe Biden was considering an order that would release diesel-fuel from government-held reserves.
June natural-gas futures
jumped 8.2% to finish at $8.744 per million British thermal units.
European Union officials continued to work toward an agreement that would phase out imports of Russian crude and other energy in response to Russia’s invasion of Ukraine. Demands by Hungary have held up an agreement, which needs unanimous approval from all 27 members.
The EU’s top energy official on Monday said she was optimistic a proposal last week that would provide 2 billion euros ($2.1 billion) in energy-infrastructure investment to Hungary, Czech Republic and Slovakia, would help pave the way for an agreement, Reuters reported.
Meanwhile, oil prices have been supported “as gasoline markets remain tight amid solid demand heading into the peak U.S. driving season. Refineries are typically in ramp-up mode to feed U.S. drivers unquenching thirst at the pump,” said Stephen Innes, managing partner at SPI Asset Management, in a note.
The Energy Information Administration last week reported that total U.S. motor gasoline inventories decreased by 4.8 million barrels in the week ended May 13 and stood around 8% below the five-year average for this time of year. Distillate fuel inventories increased by 1.2 million barrels in the week ended May 13, but remained about 22% below the five year average.
Prices for gasoline at the pump are at a record, while prices for diesel, crucial for transporting goods, have also hit all-time highs.
But support for crude may have been undercut somewhat after a White House spokeswoman said an emergency declaration has been prepared for Biden that would authorize a release from the Northeast Home Heating Oil Reserve.
Crude has also been underpinned as China moves toward easing lockdown measures in Shanghai, analysts said. Traders, however, were also watching reports of surging COVID cases in Beijing. where officials extended an order for students and workers to stay home and will carry out more mass testing in the nation’s capital.
Meanwhile, news reports that the White House and Saudi Arabia’s crown prince, Mohammed bin Salman, were working toward a meeting could keep a lid on crude’s upside, Innes said. Saudi Arabia has so far resisted U.S. calls for the Organization of the Petroleum Exporting Countries and its allies to more aggressively boost output in response to tightening crude supplies.