Oil on track for weekly gains on global supply concerns

© Reuters. FILE PHOTO: Technicians stand next to an oil rig at an Oil and Gas Corporation (ONGC) factory during a media tour of the factory in Dhamasna village in the western Indian state of Gujarat on August 26, 2021.REUTERS/Amit Dave

By Kustav Samantha and Stephanie Kelly

SINGAPORE (Reuters) – Oil prices fell on Friday but remained near two-month highs, on track for their biggest weekly gain in 1-1/2 months, helped by the prospect of an EU ban on Russian oil and The upcoming U.S. summer driving season.

July Brent crude futures were down 21 cents, or 0.2%, at $117.19 a barrel by 0642 GMT, after rising as high as $118.17 earlier in the session. The benchmark is still on track to gain about 4% this week.

U.S. West Texas Intermediate (WTI) crude futures fell 24 cents, or 0.2%, to $113.85 a barrel. Weekly gains for WTI are set at around 0.5%.

“Supply concerns are definitely in focus as the U.S. product market has tightened significantly while the European Union is still considering a ban on Russian crude exports,” said Madhavi Mehta, commodities research analyst at Kotak Securities.

She added: “The U.S. market will continue to be in focus in the near term as the summer driving season is about to begin. The virus situation in China and whether more is being done to support the economy will also be in focus.”

Both benchmark crude contracts were on track to end the week higher as the European Commission continued to seek unanimous support from all 27 EU member states for its new sanctions on Russia, with Hungary a stumbling block.

A senior Hungarian aide said it would take the country 3-1/2 to 4 years to wean itself off Russian crude and make huge investments to adjust its economy. Hungary cannot support an EU-proposed oil embargo until an agreement is reached on all issues, the aide said.

“These commodities (oil and gas) are going to rise sharply,” said Clifford Bennett, chief economist at ACY Securities.

Prices have risen about 50% so far this year.

OPEC+ will stick to last year’s oil production agreement at its June 2 meeting and raise its July output target by 432,000 bpd, six sources told Reuters. As a result, OPEC+ members will reject Western calls for faster price increases to bring down soaring prices.

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