Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Oil Down as Supply Fears Remain

Published 2022-05-16, 12:52 a/m
Updated 2022-05-16, 12:52 a/m
© Reuters.

© Reuters.

By Gina Lee

Investing.com – Oil was down on Monday morning in Asia, giving up its earlier gains as investors took profits after the previous session’s surge. However, the European Union (EU)’s impending ban on Russian crude imports is driving global supply fears.

Brent oil futures dropped 2.18% to $109.12 by 12:42 AM ET (4:42 AM GMT) and WTI futures fell 2.04% to $106.41. Both Brent and WTI benchmarks, which jumped about 4% during the previous Friday, increased by more than $1 a barrel earlier in the session, with WTI reaching its highest level since March 28 at $111.71.

"Oil markets are expected to gain this week as a pending ban by the European Union on Russian oil will further tighten global supplies of crude and fuels," Fujitomi Securities Co Ltd. chief analyst Kazuhiko Saito told Reuters.

The EU still aims to agree to a phased embargo on Russian oil within the month in response to Russia’s invasion of Ukraine on Feb. 24.

The embargo will go ahead despite concerns about supply in eastern Europe, without a delay or watered-down proposals, four diplomats and officials said on Friday.

Russia also slapped sanctions on several European energy companies and U.S. gasoline futures hit another record high on Monday as falling stockpiles fueled supply concerns.

"Oil prices remained bullish, especially WTI's near-term contract, as U.S. gasoline prices continued to rise amid weaker imports of petroleum products from Europe," said Fujitomi Securities' Saito.

On the supply side, U.S. energy firms in the week to May 13 added oil and natural gas rigs for an eighth consecutive week as high prices and prompting by the federal government saw drillers return to the wellpad.

Meanwhile, the Organization of the Petroleum Exporting Countries (OPEC) and allies (OPEC+), has been unable to meet previously agreed targets for output increases. This is due to under-investment in oilfields in some OPEC members and the more recent losses in Russian output.

According to the cartel’s latest monthly report, OPEC’s output rose by 153,000 barrels per day (bpd) to 28.65 million bpd. This lags behind the 254,000 bpd rise that OPEC is allowed under the OPEC+ deal.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.