(Bloomberg) -- Oil held steady at the week’s open as China made progress toward easing anti-virus lockdowns and the EU continued to work on a plan to ban imports of Russian crude ahead of a leaders’ summit.
Global benchmark Brent traded above $119 a barrel after jumping more than 6% last week to post the highest close in two months. The commercial hub of Shanghai allowed all manufacturers to resume operations from June, while officials said Beijing’s coronavirus outbreak is under control.
While EU nations failed to agree on a deal Sunday on a revised package of sanctions that may include a ban on Russian crude to punish Moscow for the invasion of Ukraine, talks will continue during the week. Hungary is so far refusing to back a compromise despite proposals aimed at ensuring its oil supplies. An EU official said a deal is still possible in the coming days.
Brent crude is on course for a sixth consecutive monthly climb that would be longest such run in more than a decade. The advance has been driven by the fallout from war in Europe, as well as increased demand and record product prices in economies outside China. In the US, the summer driving season kicked off at the weekend with retail gasoline prices at an all-time high.
China’s dogged adherence to its Covid Zero policy at all costs -- epitomized by Shanghai’s lockdown that began in late March and restrictions elsewhere -- have sapped energy demand, and an easing would help to support global consumption. Administration officials have both warned of the economic damage stemming from the curbs, and pledged support to offset the impact.
Oil markets remain in backwardation, a bullish pattern marked by near-term prices trading at a premium to longer-dated ones. Brent’s prompt spread -- the difference between its two nearest contracts -- was $3.67 a barrel on Monday, up from $1.34 a barrel three weeks ago.
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