Oil futures fell Friday after European Union countries fail to agree on a ban on imports of Russian crude, but ongoing supply concerns set prices up for the first weekly gain in three weeks.
President Joe Biden, speaking in Brussels, announced an agreement that would see the U.S. boost trans-Atlantic shipments of liquefied natural gas as part of a long-term plan aimed at weaning Europe off its dependence on Russian gas.
West Texas Intermediate crude for May delivery
fell $1.95, or 1.7%, to $110.39 a barrel on the New York Mercantile Exchange, with the contract trading down over 7% for the week.
April natural gas
rose 1.1% to $5.461 per million British thermal units — trading up over 12% for the week.
fell 0.3% to $3.379 a gallon, eyeing a more than 4% rise on the week, while April heating oil
declined 3.4% to $4.016 a gallon, with prices up nearly 12% from the week-ago finish.
The U.S. and U.K. have moved to ban imports of Russian crude, but several European Union countries have resisted pressure for an embargo due to their heavy reliance on supplies from the country.
“The risk of disruption to Russian oil production keeps prices high despite any formal announcement to embargo Russian crude by any significant consumer,” said Stephen Innes, managing partner at SPI Asset Management, in a daily note. “Only the U.S. and U.K. have said they will no longer purchase Russian crude and products,” he said, estimated that total amount of oil involved is around 900,000 barrels a day in aggregate.
Still the fact that oil is only trading a few dollars lower “suggests the EU embargo was always a low-probability outcome,” said Innes.
Besides, “it’s tough to be short oil as U.S. inventories continue to dwindle” and there bound to be more supply shocks in the future, he said.
“Oil prices could remain very sticky at current levels and eventually push higher when China eases all COVID restrictions in catch-up mode to the rest of the world,” Innes said.
Meanwhile, the Caspian Pipeline Consortium said crude loadings have resumed out of its terminal on Russia’s Black Sea coast after an interruption earlier this week due to bad weather, noted Warren Patterson, head of commodities at ING, in a note.
Biden and European Commission President Ursula von der Leyen announced a joint task force to reduce Europe’s dependence on Russian fossil fuels and strengthen European energy security. Among its objectives, the U.S. will work with international partners and look to ensure additional liquefied natural-gas volumes for the EU market of at least 15 billion cubic meters in 2022, with expected increases going forward, the White House said.
Looking ahead, major oil producers known as OPEC+ will meet Thursday to decide to production levels for May.