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WTI crude futures edged up toward $111 per barrel on Thursday, extending a cautious rally this week on signs of ongoing supply tightness, while the EU continues to haggle with Hungary over plans to ban oil imports from Russia. Official data showed a larger-than-expected drawdown in US crude inventories last week due to soaring exports, highlighting a tight global market. The prospect of an EU embargo on Russian oil also kept upward pressure on crude prices, with European Council Charles Michel saying Wednesday he is confident that an agreement can be reached before the council’s next meeting on May 30. Hungary is pressing for about 750 million euros to upgrade its refineries and expand a pipeline from Croatia to enable it to switch away from Russian oil. Meanwhile, the demand outlook remained clouded amid varying degrees of Covid restrictions in China and lingering concerns about inflation leading to a global economic slowdown.

US natural gas futures skyrocketed to above the $9/MMBtu mark for the first time since August of 2008, more than doubling in value since the beginning of 2022, with higher domestic and international demand being the primary driver. Prospects of increasing demand for cooling as the weather turns hotter in the United States should drive prices higher and limit last week's inventory buildup. Meanwhile, analyst surveys point to an 87 bcf increase in stockpiles, less than the 5-year average build of 97 bcf, due to higher cooling demand in several parts of the US.

EU natural gas futures traded around €85-per-megawatt-hour, close to levels not seen in three months, amid rising inventory levels and continued Russian gas flows to Europe. According to Gas Infrastructure Europe, European storage levels have increased almost 25% in May and are close to the 45% five-year average, on track to reach the recently approved minimum requirement of 80% by November. The rebuilding of inventories in the EU reflects the bloc’s efforts to secure ample LNG supplies from the US, which is shipping cargoes to the region at a record pace. On the upside, traders continued to price in lingering uncertainties about future Russian supplies, after Moscow halted shipments to Finland for failing to pay for gas in rubles, joining Poland and Bulgaria in the list of sanctioned countries. Meanwhile, UK natural gas futures hovered around 140 pence .Prices in the UK are equivalent to €56-per-megawatt-hour, which is roughly 30% of the European benchmark contract, as ample LNG supplies have filled British storage facilities and warmer weather dampened demand. The UK has more excess regasification capacity than continental Europe and is shipping excess natural gas to the bloc.

Gasoline futures were at $3.8 per gallon, easing from the record high of $4.06 touched on May 16th amid recession concerns. Fears of economic slowdown were exacerbated after work from home measures were extended in Beijing as covid cases in the area accelerated, while reports that the EU is unlikely to approve its Russian oil embargo in next week’s leader meeting also reduced energy prices. Still, prices remain close to record highs ahead of the US peak driving season, expected to kick-off following Memorial Day weekend at the end of May.

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