Oil prices fell again this week amid concerns that high fuel prices could hurt global economic growth. However, the planned easing of COVID-19 restrictions in Shanghai and the ongoing conflict between Russia and Ukraine, which has caused a tight supply outlook, has capped the losses.
Still, overall sentiment from the markets remained bullish amidst optimism regarding demand recovery in China, which looks likely to ease its current COVID-19 restrictions in the coming weeks.
Shanghai set out plans on Monday for the end of their painful COVID-19 lockdowns that have lasted over six weeks, heavily harming China's economy. They are currently planning for the return of normalcy from the 1st of June. Over the past weeks, these restrictions have reduced China’s manufacturing output, adding to already tight global oil supply chains.
"Shanghai's plans to relax the COVID-19 lockdown in stages raised expectations of a demand revival in China," said Hiroyuki Kikukawa, general manager of research at Nissan Securities.
However, the current decline in fuel prices could be limited as the U.S. approaches the start of their summer driving season. With an already tight fuel supply, this is likely to push fuel prices up even further over the coming months.
In the UK, national average retail prices remain high with Diesel ranging from between £1.77 pence per litre at Supermarkets to over £1.95 pence per litre along Motorways.
For fuel card customers, prices are likely to drop in the region of 1 pence per litre for next week.
