Tokyo (Reuters) – Oil prices went down on Monday, giving up some of the gains they had made earlier in the day, as investors took profits after a big jump in the previous session. However, global supply fears were on the rise because the European Union was getting ready to ban imports from Russia.
At 01:37 GMT, Brent crude futures fell 64 cents, or 0.6%, to $110.91 per barrel, while U.S. West Texas Intermediate (WTI) crude futures fell 60 cents, or 0.5%, to $109.89 per barrel.
Last Friday, both benchmarks went up by about 4%. Before that, they went up by more than $1 per barrel, with WTI reaching its highest level since March 28 at $111.71.
Kazuhiko Saito, the chief analyst at Fujitomi Securities Co. Ltd, said, “Oil markets are likely to rise this week because the European Union is about to ban Russian oil, which will make it even harder to get crude and fuel around the world.”
Even though there are worries about oil supplies in eastern Europe, the EU still wants to agree on a phased embargo on Russian oil this month, four diplomats and officials said on Friday. They rejected suggestions of a delay or of watering down the proposals.
Moscow’s actions in Ukraine, which it calls a “special military operation,” led to worries about supplies last week when it put sanctions on a number of European energy companies.
On the other hand, U.S. gasoline futures hit a new all-time high on Monday, as falling stockpiles added to worries about supply.
“WTI’s near-term contract remained bullish, and oil prices stayed high,” said Saito of Fujitomi Securities. “U.S. gasoline prices kept going up, and imports of oil products from Europe were getting weaker.”
On the supply side, U.S. energy companies added oil and natural gas rigs for the eighth week in a row in the week ending May 13. Drillers went back to the good pad because of high prices and pressure from the federal government.
Elsewhere OPEC+, which is made up of the Organization of Petroleum Exporting Countries (OPEC) and its allies, like Russia, hasn’t been able to keep up with plans to increase production. This is because some OPEC members haven’t put enough money into their oil fields and, more recently, Russia’s production has been going down.
In April, OPEC’s output went up by 153,000 barrels per day (BPD) to 28.65 million BPD. This is less than the 254,000 BPD increase that OPEC is allowed under the OPEC+ deal.
