Oil Muted As Price Cap Proposal Eases Supply Concerns
2 mins read
Published on December 23, 2022
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%, to $85.12 a barrel by 15.15 p.m. ET (2015 GMT), while U.S. WTI crude futures rose 2 cents, to $77.96.
Trading volumes were thin because of the Thanksgiving holiday in the United States.
Both benchmarks plunged more than 3% 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 $65-$70 a barrel, a European official said, though European Union governments have yet to agree on a price.
A higher price cap could make it attractive for Russia to continue to sell its oil, reducing the risk of a supply shortage in global oil markets.
Some Indian refiners are paying the equivalent to a discount of around $25 to $35 a barrel to international benchmark Brent crude for Russian Urals crude, two sources said. Urals is Russia's main export crude.
"The Russian price cap is another catalyst that served to get prices lower over the last little while," said Bart Melek, global head of commodity market strategy at TD Securities, adding he was fairly bullish on oil despite the headwinds.
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. [EIA/S]
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.
Great Deals on Used CarsView All Used Cars
- 1,000 km
- 2,322 km
- 42,000 km
- 15,666 km
- 50,000 km
- 60,000 km
- 74,440 km
- 62,246 km
- 67,000 km
- 50,561 km
6 hours ago
Now in its 10th year on sale, Maruti’s compact sedan found the least amount of takers this year in the month of November.
7 hours ago
TVS Motor Company saw a growth of 50 per cent in domestic sales from November 2022.
The company witnessed an increase in numbers due to the festive season registering a growth of 20 per cent compared to the corresponding month last year
The Thunder Edition is up to Rs 2 lakh more affordable than the standard Jimny and is available for a limited period.
Tesla Motors has begun deliveries of the Cybertruck in USA. Currently, there are two models on sale, an AWD variant and the top-spec model, which is dubbed ‘Cyberbeast’.
The brand has witnessed a YoY growth of 9.7 per cent compared to the corresponding period last year.
Maruti continued to see strong demand in the utility vehicle and van segments, though small car sales continue to sag.
The brand has witnessed a dip in sales of 18 per cent when compared to sales from the previous month.
Previously, in October 2023, the Exter bagged over 75,000 bookings, and the 50,000 mark was reached within the first month of its launch.
11 hours ago
New tech moves the EV's reduction gear into the wheel hub allowing for more compact electric motors and greater space efficiency
On Monday, both benchmarks ended about 1% higher after falling to their lowest since December 2021
In volatile trade, Brent crude futures for May rose 82 cents, or 1.1% to $73.79 a barrel. U.S. West Texas Intermediate crude futures for April gained 90 cents, or 1.4%, at $67.64
Brent has fallen by more than 10% since Friday's close, while U.S. crude is down more than 14%.
For April, Indian refiners Reliance Industries Ltd and Nayara Energy have reportedly snapped up at least five of the about 33 ESPO crude cargoes due to low prices.
Demand was the highest recorded in data compiled by the Indian Oil Ministry's Petroleum Planning and Analysis Cell (PPAC) going back to 1998.