Oil jumps 4% as United States gasoline prices hit new record high 

Oil prices rose about 4% on Friday as U.S. gasoline prices jumped to a record high.

Oil prices have been volatile, caused by fears over an EU ban on Russian oil which could tighten supplies but pressured by fears that a resurgent COVID-19 pandemic or other factors could cut global demand.

“An EU embargo, if fully enacted, could take about 3 million bpd (barrels per day) of Russian oil offline, which will completely disrupt, and ultimately shift global trade flows, triggering market panic and extreme price volatility,” said Rystad Energy analyst Louise Dickson.

Brent futures rose $4.10, or 3.8%, to settle at $111.55 a barrel. U.S. West Texas Intermediate (WTI) crude rose $4.36, or 4.1%, to settle at $110.49.

U.S. gasoline futures soared to an all-time high after stockpiles fell last week for a sixth straight week. That boosted the gasoline crack spread, a measure of refining profit margins – to its highest since it hit a record in April 2020 when WTI finished in negative territory.

“There has not been an increase in (U.S.) gasoline storage since March,” said Robert Yawger, executive director of energy futures at Mizuho, noting gasoline demand is poised to spike when summer driving season starts on the U.S. Memorial Day holiday weekend.

This week, Moscow put sanctions on the owner of the Polish part of the Yamal natural gas pipeline that carries Russian gas to Europe, as well as the former German unit of the Russian gas producer Gazprom, whose subsidiaries service Europe’s gas consumption.

In China, stocks rose as authorities pledged to support the economy and city officials said Shanghai would start to steadily ease coronavirus traffic restrictions and open shops this month.

SPI Asset Management managing partner Stephen Innes said in a note that oil traders were looking “for a glimmer of light at the end of China’s gloomy lockdown tunnel.”

“Still, we continuously end up at square one with lower case counts weighted against the authorities doubling down on their zero COVID policy,” Innes added.