© Reuters. FILE PHOTO: Workers see oil pumps in the background at the Uzen oil and gas field in Kazakhstan’s Mangistau region on November 13, 2021. REUTERS/Pavel Mikheyev
LONDON (Reuters) – Oil prices fell on Thursday on concerns that high oil prices could hurt economic growth, but plans to ease restrictions in Shanghai and a tight supply outlook capped losses.
July futures were down 75 cents, or 0.7%, at $108.36 a barrel by 1354 GMT, after hitting an intraday low of $105.75. U.S. West Texas Intermediate (WTI) crude futures for June fell $1.42, or 1.3%, to $108.17 a barrel after falling to $105.13 earlier.
Front-month prices for both benchmarks fell about 2.5% on Wednesday.
“The plunge in stocks led by the U.S. retail sector has raised concerns about economic growth and, in turn, fuel demand,” said Saxo Bank analyst Ole Hansen.
Stocks in Europe and Asia fell sharply after Wall Street’s worst day since mid-2020, as stark warnings from some of the world’s biggest retailers underlined the severity of inflation.
However, the possibility of a looming EU ban on Russian oil imports has been supporting prices.
This month, the European Union proposed a new package of sanctions for Russia’s invasion of Ukraine, which Moscow called a “special military operation.”
That would include a complete ban on oil imports for six months, but has yet to take steps, and Hungary is one of the most vocal critics of the plan.
Russian Deputy Prime Minister Alexander Novak said on Thursday that Moscow will send any oil rejected by European countries to Asia and elsewhere.
Russian oil production fell by about 1 million bpd in April but rose by 200,000 bpd to 300,000 bpd in May, Novak said, with more output expected to resume next month.
On Wednesday, the European Commission unveiled a 210 billion-euro ($220 billion) European plan to end Russia’s reliance on fossil fuels by 2027 and use a pivot away from Moscow to speed up the transition to green energy.
Also, inventories fell last week, unexpectedly falling, as refiners boosted output in response to tight product inventories and near-record exports, forcing U.S. diesel and gasoline prices to record levels. [EIA/S]
Both the East Coast and Gulf Coast are operating at more than 95 percent capacity, pushing these refineries near their peak operating rates.
In China, investors are closely watching plans to ease coronavirus restrictions in Shanghai, the most populous city, from June 1, which could lead to a rebound in oil demand in the world’s largest crude importer.
(1 USD = 0.9537 EUR)