Commodities

Oil prices open lower as EU struggles to seal Russia import ban



© Reuters. FILE PHOTO: Oil pump jacks are seen at the Vaca Muerta shale oil and gas deposit in the Patagonian province of Neuquen, Argentina, January 21, 2019. REUTERS/Agustin Marcarian

By Laura Sanicola

(Reuters) – Oil prices opened lower in early Asian trade on Tuesday after the European Union’s efforts to enact a ban on Russian oil imports, a move that would tighten global supply, ran into resistance from member country Hungary.

futures fell 35 cents, or 0.3%, to $113.89 a barrel at 0004 GMT, while U.S. West Texas Intermediate (WTI) crude futures fell 52 cents, or 0.5%, to $113.68 a barrel.

EU foreign ministers failed on Monday in their effort to pressure Budapest to lift its veto of a proposed oil embargo on Russia following the country’s invasion of Ukraine. An embargo would require approval from all EU nations.

On the demand side, data from China showed the world’s second-biggest economy processed 11% less in April than a year earlier amid tight COVID-19 lockdowns, with daily throughput falling to the lowest since March 2020 as refiners slashed operations on weaker consumption.

While Chinese demand drops, in the United States producers are ramping up in order replenish inventories that have dwindled in the wake of Russia’s war on Ukraine – which Moscow calls “a special military operation” – and recovery from the coronavirus pandemic.

Oil output in the Permian in Texas and New Mexico, the biggest U.S. shale oil basin, is due to rise 88,000 barrels per day (bpd) to a record 5.219 million bpd in June, the U.S. Energy Information Administration (EIA) said in its productivity report on Monday.

Inventories in the Strategic Petroleum Reserve fell to 538 million barrels, the lowest since 1987, data from the U.S. Department of Energy showed on Monday.



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