- G7 price cap on Russian oil could be higher than current trade levels
- EIA gasoline stockpile data shows higher than expected buildup
- COVID-19 controls tighten in China
NOVEMBER 24 (Portal) – Benchmark Brent oil was lower on Thursday, while West Texas Intermediate (WTI) crude remained stable and hovered within sight of two-month lows as the level of a proposed G7 cap on the price of Russian oil cast doubt on it how much would it limit supply.
A larger-than-expected increase in US gasoline stockpiles and the expansion of COVID-19 controls in China added downward pressure on crude oil prices.
Brent crude futures were down 29 cents, or 0.3%, at $85.12 a barrel by 3:15 p.m. ET (2015 GMT), while US WTI crude futures were up 2 cents to $77.96.
Trading volume was low due to the Thanksgiving holiday in the United States.
Both benchmarks tumbled more than 3% on Wednesday after news that the proposed price cap for Russian oil could be higher than current market levels.
European Union governments remained at odds over what level Russian oil prices should be capped at to curb Moscow’s ability to pay for its war in Ukraine without causing a global oil supply shock, with further talks possible on Friday if adjust the positions. Continue reading
The G7 group is considering capping Russian sea oil at $65-$70 a barrel, a European official said, although European Union governments have yet to agree on a price.
A higher price cap could make it attractive for Russia to keep selling its oil, reducing the risk of a supply tightening in global oil markets.
Some Indian refiners are paying a discount of about $25 to $35 a barrel on international benchmark Brent crude for Russian Ural crude, two sources said. The Urals are Russia’s main crude oil export.
“Russia’s price cap is another catalyst that has helped bring prices down lately,” said Bart Melek, global head of commodity market strategy at TD Securities, adding that he is fairly bullish on oil despite the headwinds .
Oil prices also came under pressure after the Energy Information Administration (EIA) said on Wednesday that US gasoline and distillate inventories had risen significantly over the past week.
But crude inventories (USOILC=ECI) fell 3.7 million barrels to 431.7 million barrels in the week ended November 18, compared with expectations of a 1.1 million barrel decline in a Portal poll of analysts.
China on Wednesday reported the highest number of daily COVID-19 cases since the pandemic began nearly three years ago. Local authorities tightened controls to contain the outbreaks, adding to investor concerns about the economy and fuel demand.
Reporting by Ahmad Ghaddar; Additional reporting by Nia Williams in British Columbia, Ahmad Ghaddar in London, Yuka Obayashi in Tokyo and Muyu Xu in Singapore; Edited by Marguerita Choy, Mark Potter and Daniel Wallis
Our standards: The Trust Principles.