Oil extends gains as supply fears outweigh China lockdowns

Oil prices rose for a fourth day as fears over Russian supply disruption outweighed the impact of COVID-19 lockdowns in China, the world’s biggest crude importer.

Brent crude futures rose by $2.21, or 2.1 percent, to $109.80 a barrel by 1358 GMT after gaining 2.1 percent in the previous session. The front-month June contract expires later on Friday. The more active July contract rose by $1.95 to $109.21.

U.S. West Texas Intermediate crude gained $1.44, or 1.4 percent, to $106.80 after advancing by 3.3 percent on Thursday.

Both contracts are set to finish up on the week and post their fifth straight month of gains, buoyed by the increased likelihood that Germany will join other European Union member states in an embargo on Russian oil.

Oil prices have remained volatile with China showing no signs of easing lockdown measures despite the impact on its economy and global supply chains.

On the supply side, OPEC+ is likely to stick to its existing deal and agree another small output increase for June when it meets on May 5, six sources from the producer group told Reuters on Thursday.

However, Russian oil production could fall by as much as 17 percent this year, an economy ministry document seen by Reuters showed on Wednesday, as Western sanctions over Russia’s invasion of Ukraine hurt investments and exports.