Oil was little changed as traders weigh fresh efforts from the European Union to crimp Russian energy exports.
West Texas Intermediate crude earlier gained as much as 2.1% to trade above $68 a barrel after the EU agreed to a lower price cap for Moscow’s crude as part of a package of sanctions on Moscow. The measures include curbs on fuels made from Russian petroleum, additional banking limitations and a ban on a large oil refinery in India. The Asian country, which buys large amounts of Russian crude, is a major exporter of refined products to Europe, where markets for fuels like diesel have been tight.
“While the EU measures may not drastically impact crude flows, the restrictions on refined products and expanded shadow fleet targeting are fueling concern in the diesel complex,” said Rebecca Babin, a senior energy trader at CIBC Private Wealth Group.
Oil has trended higher since early May, with both Morgan Stanley and Goldman Sachs Group Inc. making the case that a buildup in global crude stockpiles has occurred in regions that don’t hold much sway in price-setting.
Meanwhile, spreads in the diesel market are indicating tightness. The gap between the first and second month of New York heating oil futures climbed to $3.53 a gallon, up from $2.99 on Thursday.
“The logic of diesel tightness propping up crude flat prices remains unchanged,” said Huang Wanzhe, an analyst at Dadi Futures Co., who added that the peak-demand season had seen a solid start. “The key question is how long this strength can last,” she said.
In wider markets, strong US data on consumer sentiment eased concerns about the world’s largest economy, helping to underpin a risk-on mood.
Crude futures also remain in backwardation in the nearer months of their curves, which means traders are having to pay more to secure prompt supplies. That pattern points to tight conditions even as producers’ cartel OPEC has been relaxing output curbs at a rapid clip.
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With assistance from Sarah Chen.
This article was generated from an automated news agency feed without modifications to text.
