Oil Snaps 4-Day Rally After Waddling Over EU Move on Russia

© Reuters.

By Barani Krishnan

AiVIF.com -- Oil prices fell for the first time in five days as market participants showed their displeasure at Europe’s continued waddling over its proposed ban on Russian oil.

The inclination to wait out industry data on U.S. stockpiles, due after Tuesday’s market settlement, also led to choppy price action that eventually resulted in the lower close.

New York-traded West Texas Intermediate, or WTI, settled at $112.40, down $1.80, or 1.6%. The U.S. crude benchmark had risen a cumulative 14.5% over four prior sessions, reaching a 7-week high of $114.90 on Monday.

London-traded Brent settled at $111.93, down $2.31, or 2%. The global crude benchmark had also risen by 11.5% between May 10 and 16,  reaching a one-month high of $114.79 in the previous session.

“Crude prices initially surged as China’s fight against COVID appears to be headed in the right direction, but gave up a good amount of gains after US officials signaled that the strategy on Russian crude could switch from embargo to tariffs,” said Ed Moya, analyst at online trading platform OANDA.

“The oil market remains tight but if the EU embraces the strategy of putting tariffs on Russian crude instead of phasing them out, the rally with oil prices might show some exhaustion here,” Moya added.

Market participants were also on the lookout for U.S. weekly oil inventory data, due after market settlement from API, or the American Petroleum Institute.

The API will release at approximately 4:30 PM ET (20:30 GMT) a snapshot of closing balances on U.S. crude, gasoline and distillates for the week ended May 13. The numbers serve as a precursor to official inventory data on the same due from the U.S. Energy Information Administration on Wednesday.

For last week, analysts tracked by AiVIF.com expect the EIA to report a crude stockpile build of 1.38 million barrels, versus the 8.49-million barrel rise reported during the previous week to May 6.

On the gasoline inventory front, the consensus is for a draw of 1.33 million barrels over the 3.61 million-barrel decline in the previous week.

With distillate stockpiles, the expectation is for a drop of 800,000 barrels versus the prior week’s deficit of 913,000.