Oil fluctuates as new Shanghai curbs counter strong fuels market

Oil erased gains as traders weighed plans for a renewed lockdown in parts of Shanghai against a robust global market for refined fuels.

West Texas Intermediate futures traded near US$122 a barrel. Shanghai will implement its first major restrictions on movement since the financial hub exited a two-month shutdown at the start of June, calling into question the demand recovery in one of the world’s biggest oil-consuming countries.

The renewed curbs are keeping prices in check after crude this week hit a three-month high amid strong product markets. U.S. gasoline inventories are at their lowest seasonal level in eight years, while consumption is rising even as retail prices for the motor fuel -- already at a record -- approach US$5 a gallon.