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SINGAPORE: Oil prices were mixed on Friday as COVID-19 lockdowns in China weighed on crude demand prospects, although fears of supply disruption as Western sanctions curb crude exports and of products from Russia supported prices, according to Reuters.

Brent crude futures rose 15 cents to $107.74 a barrel at 0410 GMT after gaining 2.1% in the previous session. The contract for the first month of June expires later on Friday. The more active July contract rose 26 cents to $107.52 a barrel.

U.S. West Texas Intermediate crude fell 3 cents to $105.33 a barrel after rising 3.3% on Thursday.

Both contracts are expected to end the week higher, with WTI on track to post five consecutive months of gains, supported by the increased likelihood that Germany will join other European Union member states in a trade embargo. Russian oil.

Still, oil prices have been volatile as Beijing has shown no signs of easing lockdown measures despite the impact on its economy and global supply chains.

“With the intensification of full and partial lockdowns since March, China’s economic indicators have dipped further into the red. We now expect China’s GDP to slow further in the second quarter,” Yanting Zhou, head of APAC economics at Wood Mackenzie, said in a note.

“Oil market volatility is set to continue, with the potential for more widespread and prolonged lockdowns into May and beyond, skewing near-term risks for China’s oil demand – and prices – to the downside. .”

On the supply side, OPEC+ is expected to stick to its existing deal and agree another small production increase for June at its May 5 meeting, six sources from the group told Reuters on Thursday. of producers.

However, Russia’s oil production could fall by 17% in 2022, according to an economy ministry document seen by Reuters on Wednesday, as Western sanctions imposed on Moscow over its invasion of Ukraine have hurt investment and to exports. Russia calls it a “special military operation” to disarm Ukraine.

The sanctions also made it increasingly difficult for Russian vessels to ship oil to customers, prompting Exxon Mobil Corp. to declare a case of force majeure for its Sakhalin-1 operations and to reduce its production.

Concerns about disruptions to Russian oil exports, particularly diesel, have pushed Asian refiner margins to record highs.

Diesel futures closed Thursday at a record high of $5.14 a gallon, as New York Harbor diesel traded at a record premium to futures prices on what traders are describing as a short squeeze from May’s diesel contract.

Penny D. Jackson