Oil eases as China lockdowns weigh on demand outlook

Both contracts are set to close the week higher, with WTI on track to post five straight months of gains, buoyed by the increased likelihood that Germany will join other European Union member states in an embargo on Russian oil.

Still, oil prices have been volatile as Beijing has shown no sign of easing lockdown measures despite the impact on its economy and global supply chains.

"With both full and partial lockdowns ramping up since March, China's economic indicators have plunged further into the red. We now expect China's GDP to slow further in Q2," Wood Mackenzie's Head of APAC Economics Yanting Zhou said in a note.

"Oil market volatility is set to continue, with the potential for more widespread and prolonged lockdowns into May and beyond, skewing the near-term risks for China's oil demand -- and prices -- to the downside."

On supplies, OPEC+ is likely to stick to its existing deal and agree with another small output increase for June when it meets on May 5, six sources from the producer group told Reuters on Thursday.

However, Russia's oil production may fall by as much as 17 percent in 2022, an economy ministry document seen by Reuters showed on Wednesday, as Western sanctions imposed on Moscow over its invasion of Ukraine hurt investments and exports. Russia calls it a "special military operation" to disarm Ukraine.

Sanctions have also made it increasingly difficult for Russian ships to send oil to customers, prompting Exxon Mobil Corp to declare force majeure for its Sakhalin-1 operations and curtail output.