TOKYO- Oil prices fell on Thursday, extending losses from the previous session, as fears of supply disruption eased on news that the Group of Seven (G7) nations were considering a high price cap on Russian oil.
A greater-than-expected build-up in US gasoline inventories added to downward pressure.
Brent crude futures had slid 43 cents, or 0.5 percent, to $84.98 a barrel, while US West Texas Intermediate (WTI) crude futures dropped 35 cents, or 0.5 percent, to $77.59 a barrel.
Both benchmark contracts plunged more than 3 percent on Wednesday on news that the planned price cap could be above the current market level.
The G7 is looking at a cap on Russian seaborne oil in the range of $65-70/bbl, according to a European official, though European Union governments have not yet agreed with each other on the matter.
The range of $65 70/bbl would be higher than markets had expected, Commonwealth Bank commodities analyst Vivek Dhar said in a report. It would reduce the risk of global supply being disrupted, Dhar said.
“If the EU agree to an oil price cap of $65 70/bbl this week, we see downside risks to our oil price forecast of $95/bbl this quarter,” Dhar said, adding that the forecast assumed EU sanctions accompanied by a price cap on Russian oil would disrupt enough supply to offset ongoing global growth concerns.
EU governments will resume talks on Thursday evening or on Friday, according to EU diplomats.
Oil prices also came under downward pressure after the Energy Information Administration (EIA) said on Wednesday that US gasoline and distillate inventories had both risen substantially last week. The increase alleviated some concern about market tightness.
But crude inventories fell by 3.7 million barrels in the week to Nov. 18 to 431.7 million barrels, compared with analysts’ expectations in a Reuters poll for a 1.1 million-barrel drop.
