Oil rises on peak US demand amid Memorial Day weekend

3 min read | May 30, 2022 02:13 PM AEST | By Arpit Verma

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Oil rises on peak US demand amid Memorial Day weekend — Image source: © 2022 Kalkine Media®

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Highlights

Crude oil prices jump on Monday.

With global supplies lagging to meet demand, the worldwide oil market is anticipated to remain undersupplied.

Hungary has held up the EU's sixth package of sanctions against Russia over its invasion of Ukraine.

Crude oil prices extended their gains on Monday after closing the last week with substantial gains. The significant gains in the prices of both crude oil benchmarks come amid the U.S. Memorial Day holiday weekend when the country's energy demand peaks. The prices also got support as European Union countries are negotiating a deal on Russian oil sanctions that would embargo shipment deliveries.

A strong worldwide energy demand with both heating oil and gasoline futures outpacing crude oil this year also supported oil demand & eventually its prices.

In addition to this, a strong travel demand coupled with the US driving season also fuelled the demand. Normally, the US peak driving season starts on Memorial Day weekend in May and closes on Labour Day in September. A tight gasoline market amid a solid demand due to the peak US driving season has buoyed global crude oil prices.

With global supplies lagging to meet demand, the worldwide oil market is anticipated to remain undersupplied.

The prices of both oil benchmarks gained more than 66% in the last one year with WTI crude oil futures gaining as much as 73.51% in the same period.

Also Read: Crude oil surges to 14-year highs on delays in Iranian talks

Both crude oil benchmarks have grown remarkably in the last three months after Russia officially announced Ukraine's invasion.

On Friday, Brent Crude oil settled at US$119.43/bbl, up 1.7%, and WTI crude oil settled at US$115.07/bbl, up 0.9%.

On Monday, August delivery Brent Crude oil futures gained and last traded at US$116.51 per barrel up 1.05%, while July delivery WTI crude oil futures exchanged hands at US$116.03 per barrel, up 0.83% at 11:48 AM AEST.

EU’s Russian oil embargo

European Union nations are expected to reach a deal that could ban seaborne deliveries of Russian oil. However, it still allows deliveries through pipelines, a compromise to win over Hungary.

Hungary has held up the EU's sixth package of sanctions against Russia over its invasion of Ukraine. The country states that halting Russian oil imports would be a body blow to its economy because the landlocked country cannot easily get oil from elsewhere.

Hungary says it needs up to four years to shift away from Russian crude, requiring investments of about 750 million euros to upgrade refineries and expand a pipeline bringing oil from Croatia.

Also Read: Crude oil slides from multi-year highs as Iran talks rev up

Bottom Line

Crude oil prices gained significantly on Monday, extending last week's rally on prospects of higher demand amid the U.S. Memorial Day holiday weekend when the country's energy demand peaks.

Here’s how commodities performed in the last week click here

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