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Futures Movers: Oil prices snap 3-day winning streak but book April rise; diesel prices soar

Oil futures snapped a three-day winning streak Friday, but booked weekly and monthly gains as supply worries tied to Russia’s invasion of Ukraine outweighed concerns over a hit to demand from China’s COVID lockdowns.

Meanwhile, May heating oil futures expired at a record, with tight distillate stocks also sending cash prices for all-important diesel fuel soaring.

Price action

West Texas Intermediate crude for June delivery CL.1 CL00 CLM22 fell 67 cents, or 0.6%, to close at $104.69 a barrel on the New York Mercantile Exchange, with the U.S. benchmark logging at 2.6% weekly rise and a 4.4% April gain, based on the most actively traded contract.

June Brent crude
BRNM22,
+1.68%
,
the global benchmark, rose $1.75, or 1.6%, to close at $109.34 a barrel on ICE Futures Europe. July Brent
BRN00,
-0.78%

BRNN22,
-0.78%
,
the most actively traded contract, fell 12 cents, or 0.1%, to $107.14 a barrel.

June natural-gas futures
NGM22,
+5.75%

jumped 5.2% to finish at $7.244 per million British thermal units, up 28.4% in April for its biggest monthly gain since 2009.

June gasoline
RBM22,
-1.40%

fell 1% to finish at $3.4424 a gallon. June heating oil
HOM22,
-0.71%

rose 0.2% to $4.0172 a gallon. May heating oil
HOK22,
-13.95%

traded at an all-time high near $5.86 a gallon before its expiration Friday, according to FactSet data.

Market drivers

Oil initially rose, with the uptick “attributable to the increased probability of an EU oil embargo against Russia now that Germany has stopped opposing such a measure,” said Carsten Fritsch, analyst at Commerzbank, in a note.

“This change in stance comes as no surprise given that Germany’s Economics Minister Habeck said a few days ago that Germany now imports only 12% of its oil from Russia.

“German representatives to European Union institutions on Thursday lifted objections to a full embargo of Russian supplies provided Berlin was given enough time to find alternative supplies, The Wall Street Journal reported Thursday, citing government officials. Germany, with Europe’s largest economy, has been a key roadblock to an EU embargo linked to Russia’s invasion of Ukraine. The U.S. and U.K. had previously moved to end purchases of Russian oil.

Meanwhile, diesel prices have surged amid tight supplies of distillates on both sides of the Atlantic, Fritsch noted. The U.S. Energy Information Administration on Wednesday reported that distillate inventories dropped by 1.4 million barrels last week, versus forecasts for a decline of just 100,000 barrels.

“Furthermore, the largest Russian oil producer plans in future to demand ruble payments for diesel shipments, which makes a delivery stop likely even if oil products were not affected by an EU embargo,” Fritsch said.

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