Oil muted as price cap proposal eases supply concerns
Benchmark Brent oil edged lower on Thursday while West Texas Intermediate (WTI) crude held steady, hovering in sight of two-month lows as the level of a proposed G7 cap on the price of Russian oil raised doubts about how much it would limit supply.
A bigger-than-expected build in U.S. gasoline inventories and widening COVID-19 controls in China also added downward pressure on crude prices.
Brent crude futures were down 29 cents, or 0.3 per cent, to US$85.12 a barrel, while U.S. WTI crude futures rose 2 cents, to US$77.96.
Trading volumes were thin because of the Thanksgiving holiday in the United States.
Both benchmarks plunged more than 3 per cent on Wednesday on news the planned price cap on Russian oil could be above the current market level.
European Union governments remained split over what level to cap Russian oil prices at to curb Moscow’s ability to pay for its war in Ukraine without causing a global oil supply shock, with more talks possible on Friday if positions converge.
The G7 group of nations is looking at a cap on Russian seaborne oil at US$65US$70 a barrel, a European official said, though European Union governments have yet to agree on a price.
Some Indian refiners are paying the equivalent to a discount of around US$25 to US$35 a barrel to international benchmark Brent crude for Russian Urals crude, two sources said. Urals is Russia’s main export crude.
Oil prices also came under pressure after the Energy Information Administration (EIA) said Wednesday U.S. gasoline and distillate inventories rose substantially last week.
But crude inventories fell by 3.7 million barrels to 431.7 million barrels in the week to Nov. 18, compared with expectations for a 1.1 million barrel drop in a Reuters poll of analysts.
China on Wednesday reported the highest number of daily COVID-19 cases since the start of the pandemic nearly three years ago. Local authorities tightened controls to stamp out the outbreaks, adding to investor concern over the economy and fuel demand.