- G7 price limit for Russian oil may be higher than the current trading level
- EIA data on gasoline inventories show higher-than-expected growth
- China tightens control over the spread of COVID-19
November 24 (Reuters) – Oil prices fell on Thursday, hovering near a two-month low, as the level of the G7’s proposed price cap on Russian oil raised doubts about how much it would restrict supply.
Larger-than-expected increases in U.S. gasoline stockpiles and increased COVID-19 controls in China have also put downward pressure on oil prices.
Brent crude futures fell 28 cents, or 0.3%, to $85.13 a barrel by 12:48 pm ET (1748 GMT), while US West Texas Intermediate crude futures (WTI) fell 5 cents, or 0.1%, to $77.89.
Trading volumes were low due to the Thanksgiving holiday in the United States.
Both benchmarks fell more than 3% on Wednesday on news that the planned price ceiling for Russian oil could be higher than the current market level.
European Union governments remain divided over how much to cap Russian oil prices to limit Moscow’s ability to pay for its war in Ukraine without causing a global oil supply shock. Additional talks are possible on Friday if positions converge. read more
The G7 group of countries is considering capping Russian offshore 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 continue selling its oil, which would reduce the risk of supply shortages in global oil markets.
The Kremlin said on Thursday that Russia has no plans to supply oil and gas to countries that support the restriction, but will make a final decision after analyzing the numbers.
“Given that the current Russian export price is below the proposed limit, the price cap automatically implies continuous Russian exports,” said PVM Oil analyst Tamas Varga.
Some Indian refiners are paying a $25 to $35 per barrel discount to international benchmark Brent oil for Russian Urals oil, the two sources said. Urals is Russia’s main export oil.
Oil prices also came under pressure after the Energy Information Administration (EIA) said on Wednesday that U.S. gasoline and distillate inventories rose substantially last week.
But crude oil inventories (USOILC=ECI) fell 3.7 million barrels to 431.7 million barrels in the week to Nov. 18, compared with an expected fall of 1.1 million barrels, according to a Reuters poll of analysts.
China on Wednesday reported its highest number of daily COVID-19 cases since the pandemic began nearly three years ago. Local authorities have tightened controls to root out outbreaks, adding to investor worries about the economy and fuel demand.
Reporting by Ahmad Ghaddar Additional reporting by Nia Williams in British Columbia, Ahmad Ghaddar in London, Yuki Obayashi in Tokyo and Muyu Xu in Singapore Edited by Marguerite Choi and Mark Potter
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