Oil on track for weekly rise amid global supply concerns

© Reuters. FILE PHOTO: Technicians stand next to an oil rig at an Oil and Natural Gas Corp (ONGC) plant, during a media tour of the plant in Dhamasna village in the western state of Gujarat, India, August 26, 2021. REUTERS/Amit Dave

By Koustav Samanta and Stephanie Kelly

SINGAPORE (Reuters) -Oil prices dipped on Friday but stayed near a two-month high, with Brent crude on track for its biggest weekly jump in 1-1/2 months, supported by the prospect of an EU ban on Russian oil and the upcoming U.S. summer driving season.

Brent crude futures for July were down 21 cents, or 0.2%, at $117.19 a barrel at 0642 GMT after rising as high as $118.17 earlier in the session. The benchmark was still on track for a gain of about 4% this week.

U.S. West Texas Intermediate (WTI) crude futures were down 24 cents, or 0.2%, at $113.85 a barrel. WTI is set for a weekly gain of about 0.5%.

"Supply concerns are definitely in focus as (the) U.S. product market has tightened significantly, while the European Union is still considering ban on Russian crude exports," said Madhavi Mehta, commodity research analyst at Kotak Securities.

The "U.S. market will remain in focus in the near term as we are near the start of the summer driving season. Also in focus will be China's virus situation and whether more measures are being taken to support the economy," she added.

Both benchmark crude contracts were poised to end the week higher as the European Commission continued to seek unanimous support of all 27 EU member states for its proposed new sanctions against Russia, with Hungary posing a stumbling block.

A top Hungarian aide said the country needed 3-1/2 to 4 years to shift away from Russian crude and make huge investments to adjust its economy. Hungary could not back the EU's proposed oil embargo until there was a deal on all issues, the aide said.

"The combination of actual loss of supply and the increasing refusal to accept supply from Russia will see these commodities (oil and gas) move considerably higher," said Clifford Bennett, chief economist at ACY Securities.

Prices have gained about 50% so far this year.

OPEC+ is set to stick to last year's oil production deal at its June 2 meeting and raise July output targets by 432,000 barrels per day, six OPEC+ sources told Reuters. The OPEC+ members would thereby rebuff Western calls for a faster increase to lower surging prices.