The oil prices changed course and closed higher on Monday, thanks to a rebound in the diesel market and fears that supply would be reduced by a possible ban on the European Union (EU) to Russian crude.
crude oil futures Brent gained 44 cents, or 0.4%, to $107.58 a barrel, while those of US crude West Texas Intermediate (WTI) rose 48 cents to $105.17 a barrel.
Diesel futures advanced 5% to $4.0172 a gallon as tight global inventories pressured oil prices. WTI and of Brent.
“The main element was a further strengthening of the diesel market that pulled the rest of the complex higher,” said Jim Ritterbusch, president of Ritterbusch and Associates.
Both benchmark contracts fell more than two dollars earlier in the session on news that the European Comission could free Hungary and Slovakia from a Russian oil embargo, as it prepares to end its next round of sanctions on Russia on Tuesday.
The EU leans toward banning imports of russian oil by the end of the year, according to two European Union diplomats, following talks between the European Commission and EU member states over the weekend.
Hungary will not vote in favor of any measure prepared by the European Union that could jeopardize the security of its oil or gas supply, Foreign Minister Peter Szijjarto said, reiterating the country’s position on RTL television on Monday.
About half of the 4.7 million barrels per day (bpd) of crude oil that Russia exports goes to the EUwhich are equivalent to approximately a quarter of the bloc’s oil imports in 2020.
On the demand side, U.S. factory activity grew at its slowest pace in nearly two years in April, according to a survey by the Institute of Supply and Management on Monday.
The ISM’s national factory activity index fell to a reading of 55.4 last month, which is still considered an expansion.
“US economic data continues to indicate an expansion in the manufacturing sector, far from a recession number,” said Phil Flynn, market analyst at Price Futures Group.
Markets in Japan, Britain, India and across Southeast Asia were closed on Monday for a holiday.
China on Saturday released data showing factory activity in the world’s second-largest economy contracted for the second consecutive month to the lowest since February 2020, due to lockdowns related to the Covid-19 pandemic.
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