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Benchmark Brent oil prices edged lower on Thursday while West Texas Intermediate (WTI) crude was steady, with Russian oil prices hovering at a two-month low on concerns over how much a proposed G7 cap would limit supply.
A larger-than-expected build in US gasoline inventories and broadening COVID-19 curbs in China also added downward pressure on crude prices.
Brent crude futures were down 29 cents, or 0.3%, at $85.12 a barrel by 15.15 pm ET (2015 GMT), while US WTI crude futures were up 2 cents, at $77.96.
Trading volume was thin due to the Thanksgiving holiday in the US.
Both benchmarks fell more than 3% on Wednesday on news that a planned price cap on Russian oil could be above current market levels.
European Union governments remain divided over what level to cap Russian oil prices to prevent Moscow’s ability to pay for its war in Ukraine without disrupting global oil supplies, with further talks possible on Friday as positions converge.
The G7 group of countries is looking at a range of $65-$70 a barrel on Russian offshore oil, a European official said, although EU governments have yet to agree on a price.
A higher price cap could make it attractive for Russia to continue selling its oil, reducing the risk of supply shortages in global oil markets.
Some Indian refiners are paying the equivalent of about a $25 to $35 per barrel discount to international benchmark Brent crude for Russian Urals crude, two sources said. The Urals are Russia’s main export commodities.
“The Russian price cap is another catalyst that has worked to push prices down in the last short period of time,” said Bart Melek, global head of commodity market strategy at TD Securities, adding that he was fairly bullish on oil despite the headache.
Oil prices were also under pressure after US gasoline and distillate inventories rose significantly last week, the Energy Information Administration (EIA) said on Wednesday. [EIA/S]
But crude inventories fell 3.7 million barrels to 431.7 million barrels in the week to Nov. 18, compared with expectations for a 1.1 million barrel decline in a lbl poll of analysts.
China on Wednesday reported its highest daily number of Covid-19 cases since the pandemic began nearly three years ago. Local authorities have tightened controls to stem the outbreak, raising investor concerns about the economy and energy demand.
Oil muted supply concerns as price cap proposal eases
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