US Fuel Reach Highest Record, Oil Price Reaches USD 111.5 per Barrel

TEMPO.CO, Jakarta - The price of oil increased by 4 percent at the end of Friday trade local time, or Saturday morning, May 14, 2022, Indonesian time. The increase was caused by the price of fuel in the United States, which currently reaches the highest record.

Meanwhile, China is preparing to loosen its Covid-19 restriction and investors worry that supply will become scarce if the European Union imposes a ban on Russian oil.

The price of Brent crude for July delivery increases by 4.10 US Dollars, which equals to 3.8 percent, to a level of USD 111.55 per barrel. The West Texas Intermediate for June delivery increases by 4.36 US Dollars, which equals to 4.1 percent, to a level of USD 110.49 per barrel as trading closes.

The price was the highest close recorded for the WTI since March 23 and marks three consecutive price increases. Meanwhile, the Brent recorded a weekly decrease for the first time in three weeks.

The United States' fuel commodity increased to its highest level ever recorded after supplies were decreasing consecutively for the past six weeks. Such condition lowers the profit margin for the refining process to its highest level after reaching a record low in April 2020 when the WTI ended up in the negative zone.

"There is still no increase of fuel storage [of the US] since March," said Robert Yawger, executive director for energy commodity at Mizuho. Robert noted that fuel demand will surge as the summer holiday driving season will begin on the Memorial Day holiday.

The American Automobile Association (AAA) stated that fuel prices in gas stations in the United States reached their highest record on Friday, May 13, 2022, with 4.43 US Dollars for gasoline and 5.56 US Dollars for Diesel.

The fluctuating fuel price is driven by concerns over the possibility of the European Union imposing a ban on Russian oil, which will restrict supplies. However, worries over the re-occurrence of COvid-19 in Europe may reduce global demands.

"The European Union EMbargo, if fully implemented, can result in around 3 million barrels per day of Russian oil to go offline, which is certainly disturbing, and in the end will be shifting the global trade current, triggering market panic and extreme price volatility," said an analyst from Rystad Energy Louise Dickson.

This week, Moscow impose sanctions on several European energy companies, causing major concerns over supplies.

In China, authorities promised to support the economy and city officials said that SHanghai will start easing traffic restrictions and begin to open shops this month.

"Crude oil price rallies amidst optimism that the China Covid situation will not worsen and because high-risk assets have begun to rebound," said Edward Moya, a senior market analyst at data and analytics company OANDA.

On another note, the global stock price increased after a week of unsteady trades, which help to boost the stock market index in the United States and Europe.

ANTARA