WTI bears in control as EU’s proposed ban on Russian oil looks unlikely

At $109.54, the price of US oil, or WTI, is down by some 0.8%, falling from a high of $110.50 to a low of $109.20. Meanwhile, crude oil prices have melted due to the EU’s proposed ban on Russian oil looks increasingly unlikely.

''Hungary has been holding out on the unilateral ban, asking for more time to allow it to find alternative sources. Prime Minister Viktor Orban said that progress on a deal will likely slip into next month. The EU has offered to phase in the sanctions to 2024, while Hungary has indicated it needs at least EUR770m to revamp its oil industry,'' analysts at ANZ Bank explained.

''The bloc’s leaders are scheduled to meet next week to continue to nut out a deal. In the meantime, Russian oil continues to flow. Overall shipments edged lower in the seven days to 20 May, with a total of 30 tankers loading about 24mbbls from Russian terminals. This equates to average flows of 3.44mb/d, down only 3%. This is despite EU financial sanctions that came into effect on 15 May. Nevertheless, the risk of higher prices remains,'' the analysts added.

''International Energy Agency Executive Director Fatih Birol said that 'we may see prices even going higher, becoming much more volatile and a major risk for the global economy'.''

Meanwhile, the summer months are here and so too is driving season in the US.

''The increasingly tight gasoline and distillate markets are also adding a layer of bullishness to the crude market as record refiner margins are likely to fuel elevated refiner intake this summer season,'' analysts at TD Securities said. ''In this context, despite macroeconomic angst, crude oil markets may be shaping up for another move higher this summer.''