Oil Dips As EU Mulls Delay In Oil Ban With Hungary Holding Out
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(Bloomberg) -- Oil edged lower as some members of the European Union said it may be time to consider delaying a push to ban Russian oil so they can proceed with the rest of the propose sanctions package.
West Texas Intermediate edged lower to trade near $105 on Thursday. European Union nations say that it may be time to consider delaying a push to ban Russian oil if the bloc can’t persuade Hungary to back the embargo. Oil fluctuated for much of the session, tugged in opposing directions by a lack of progress in European efforts to embargo Russian crude and data showing that fuel inventories are dropping to critical levels.
The International Energy Agency said that there is currently an “almost universal product shortage” and low Russian exports are worsening the tightness.
Oil has advanced more than 40% this year as Russia’s invasion of Ukraine upended an already tight supply-demand balance. The war is rerouting global crude flows, with the US and UK moving to ban the import of Russian barrels, while some Asian buyers take extra cargoes. As the war drags on, there’s mounting pressure on the European Union to curb its imports.
Europe is highly dependent on Russian crude, and some countries will find it easier to switch supply than others. Russia shipped about 720,000 barrels a day of crude to European refineries through its main pipeline to the region last year. That compares with seaborne volumes of 1.57 million barrels a day from its Baltic, Black Sea and Arctic ports.
US distillate stockpiles -- a category that includes diesel -- fell to the lowest level since 2005 last week, while gasoline supplies declined for a sixth week, according to the Energy Information Administration. The IEA says diesel inventories in the OECD are the lowest since 2008.
“Diesel drama is dominating the price action once again,” analysts at wholesale-fuel distributor TACenergy wrote in a note to clients. Gasoline stocks are also facing “logistical challenges as the world struggles to deal with the supply chain going from bad to worse over the past 3 months just in time to reach our peak demand season.”
With concerns growing about dwindling fuel stockpiles, Bank of America this week said that oil product cracks -- the profits from turning crude into fuels -- will continue to rise in the near-term as refiners try to meet summer travel demand. It sees US gasoline trading at a $34 premium to Brent for the rest of the year.
Story Link: Oil Rallies With Fuel Supply Shortage Headed Into Summer
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