Oil gains ground as fuel supply dwindles, EU weighs Russia ban

Oil managed a slim gain with the IEA highlighting the precarious state of global fuel stocks, while the EU signaled that its members may not yet be able to agree on a ban on Russian oil.

West Texas Intermediate settled near US$106 after fluctuating for most of Thursday’s session. European Union countries say it may be time to consider delaying a ban on Russian oil if the bloc fails to persuade Hungary to back the embargo. A report by the International Energy Agency has demonstrated how essential Russian supplies are to maintaining global energy balances. There is currently an “almost universal commodity shortage,” he said in his monthly oil market report.

“The commodity story is starting to be the tail wagging the dog in the rough,” said Rebecca Babin, senior energy trader at CIBC Private Wealth Management. “It just can’t be ignored.”

Oil has risen more than 40% this year as Russia’s invasion of Ukraine upset an already tight supply-demand balance. The war diverts global crude flows, with the US and UK banning imports of Russian barrels, while some Asian buyers take on additional shipments. As the war drags on, pressure mounts on the European Union to curb its imports.

U.S. distillate inventories – a category that includes diesel – fell to their lowest level since 2005 last week, while gasoline supplies fell for a sixth week, according to the Energy Information Administration. According to the IEA, diesel stocks in the OECD are at their lowest since 2008.


  • WTI for June delivery rose 42 cents to settle at US$106.13 a barrel in New York.
  • Brent for July settlement was little changed, falling 6 cents to settle at US$107.45 a barrel.

“Diesel drama again dominates price developments,” analysts at wholesale fuel distributor TACenergy wrote in a note to clients. Gasoline stocks are also facing “logistical challenges as the world struggles to cope with a supply chain that has gone from bad to worse over the past 3 months just in time to reach our peak demand season. “.

As concerns grow over dwindling fuel inventories, Bank of America said this week that petroleum product cracks — profits from turning crude into fuels — will continue to rise in the near term as refiners try meet the demand for summer travel. He sees US gasoline trading at a US$34 premium to Brent for the rest of the year.

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