Oil Prices Drop as Russian Price Cap Proposal Eases Supply Concerns
(CTN News) – Benchmark The amount of a proposed G7 restriction on the price of Russian oil sparked questions about how much it would constrain supply, causing Brent oil to go lower on Thursday as West Texas Intermediate (WTI) crude remained stable.
Brent oil is now approaching two-month lows. Widening COVID-19 limitations in China and a larger-than-anticipated increase in gasoline stocks in the United States put downward pressure on oil prices.
By 15.15 p.m. ET (2015 GMT), Brent oil prices were down 29 cents, or 0.3%, to $85.12 per barrel, while U.S. WTI crude futures were up 2 cents, to $77.96.
Due to the American Thanksgiving break, trading volumes were low. For Wednesday, both benchmarks fell more than 3% in response to reports that the proposed price restriction on Russian oil would be higher than where the market is now.
With fresh discussions potentially taking place on Friday if attitudes converge, European Union nations are still divided over the appropriate ceiling for Russian oil prices that would prevent Moscow from funding its conflict in Ukraine without disrupting the world oil supply. View More
Although the states of the European Union have not yet agreed on a price, a European official claimed that the G7 group of countries is considering capping Russian seaborne oil at $65–$70 per barrel.
A higher price limit would entice Russia to keep selling its oil, lowering the likelihood of a global oil market supply crunch.
According to two sources, certain Indian refiners are purchasing Russian Urals oil at a discount of between $25 to $35 per barrel compared to the global benchmark Brent crude. Crude from the Urals is Russia’s primary export.
Bart Melek, global head of commodities market strategy at TD Securities, said that despite the challenges, he was still quite positive about oil. “The Russian price cap is another factor that contributed to bringing prices down over the previous short while,” he said.
The Energy Information Administration (EIA) reported on Wednesday that U.S. gasoline and distillate stocks increased significantly last week, which put pressure on oil prices.
However, contrary to forecasts for a 1.1 million barrel reduction in a Reuters poll of experts, crude inventories (USOILC=ECI) decreased by 3.7 million barrels to 431.7 million barrels in the week to November 18.
The number of daily COVID-19 cases recorded by China on Wednesday was the highest since the pandemic’s commencement over three years ago.
To stop the breakouts, local officials tightened regulations, which increased investor worries about the economy and gasoline consumption.
Related CTN News:
India to Continue Buying as Much Russian Oil as it Wants, outside the price cap, Janet Yellen Says