By Peter Nurse
Investing.com — Oil prices traded lower Friday, handing back some of the previous session’s sharp gains as traders continue to study the volatile situation in eastern Europe amid concerns over global energy supplies.
U.S. Gasoline RBOB Futures were down 1.2% at $2.8819 a gallon.
Russia’s invasion of Ukraine on Thursday caused Brent prices to surge above $100 a barrel for the first time since 2014, before paring gains by the close of trade.
The Western powers, led by U.S. President Joe Biden, imposed a series of new sanctions on Russia, measures designed to hit Moscow’s ability to do business in major currencies.
However, the sanctions did not specifically target Russia’s oil and gas flows, with a number of European countries expressing reservations given Russia is the world’s second-largest crude producer and provides a significant portion of Europe’s natural gas.
“Following the latest round of sanctions which do not target oil and gas exports, the market has given back a lot of the initial gains,” said analysts at ING, in a note. ”But the uncertainty and the risk of further sanctions is clearly turning buyers away from committing to Russian oil and this is reflected in the continued weakness in the Urals differential.”
Also weighing on crude prices this session is the potential for additional supply to the global market.after Biden raised the prospect of a U.S. oil release from its strategic reserves in coordination with other nations.
“However, as we saw following the last SPR release announcement, these tend to offer only a short term solution,” ING added.
There is also the possibility of Iranian oil exports returning as talks on reviving its 2015 nuclear deal with world powers continue.
A senior Iranian cleric said Friday that ending Iran’s economic isolation by lifting banking and oil trade sanctions was Tehran’s most important demand in talks on reviving the nuclear agreement.
Attention will soon turn to next week’s meeting of the Organization of the Petroleum Exporting Countries and allied producers, including Russia, with traders keen to see whether they decide whether to stick with plans to increase their April output target by just 400,000 barrels per day.
“The U.S. will also likely pile on the pressure for OPEC to increase output more aggressively,” ING added. “These calls were largely ignored last time around, and it is difficult to see a shift in the thinking of OPEC.”
Crude Oil Lower; Uncertainties Over Russian Supplies Remain
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