Price action

• West Texas Intermediate crude for June delivery rose $3.34, or 3.3%, to close at $105.36 a barrel on the New York Mercantile Exchange.
• June Brent crude, the global benchmark, advanced $2.27, or 2.2%, to end at $107.59 a barrel on ICE Futures Europe. July Brent, the most actively traded contract, rose $2.31, or 2.2%, to $107.26 a barrel.
• June natural-gas futures fell 6.2% to $6.888 per million British thermal units.
• June gasoline finished 1.8% higher at $3.476 a gallon, while June heating oil rose 1.8% to $4.008 a gallon.

Market drivers

German representatives to European Union institutions on Thursday lifted objections to a full embargo of Russian supplies provided Berlin was given enough time to find alternative supplies, The Wall Street Journal reported, citing government officials. Germany, with Europe’s largest economy, has been a key roadblock to an EU embargo linked to Russia’s aggression in Ukraine. The U.S. and U.K. had previously moved to end purchases of Russian oil.

Russia earlier this week cut off natural-gas deliveries to Poland and Bulgaria after those countries refused to make payments in rubles, as demanded by Russian President Vladimir Putin.

That’s raised fears Russia, hit hard by Western sanctions, could move to cut off other European countries. Meanwhile, Russian Finance Minister Anton Siluanov on Wednesday said the country’s oil output could fall 17% this year due to Western sanctions, The Wall Street Journal reported.

“The globe is in a mad scramble for energy supply as Russia, as many expected, is signaling that they will use their energy dominance over Europe as a weapon. The reverberations are being felt not only in European natural gas markets but even here at home in products like gasoline but more acutely in diesel,” said Phil Flynn, analyst at Price Futures Group.

If Russia cuts off the gas supply, “Europe will have to scramble to find alternatives and diesel is one that is already undersupplied globally.”

Upside for oil has been limited as worries over the spread of COVID-19 in Beijing triggered fears of a broad lockdown of the nation’s capital. A lengthy lockdown of Shanghai, the nation’s largest city and a commercial hub, has been a negative for crude, undercutting demand expectations.

And then there’s the dollar. The ICE U.S. Dollar Index, a measure of the currency against a basket of six major rivals, rose to a five-year high as the Japanese yen plunged after the Bank of Japan pledged to buy unlimited amounts of 10-year fixed-rate Japanese Government Bonds to defend a 0.25% yield level. The euro also remained under pressure, slipping below $1.05 for the first time in five years.