Skip to main content

Oil prices rose on Thursday, reversing course after an early decline as investors bought futures ahead of a long weekend on news that the European Union might phase in a ban on Russian oil imports.

Brent futures were up $1.35, or 1.30 per cent, at $110.19 a barrel. U.S. West Texas Intermediate futures were $1.24 or 1.18 per cent higher at $105.48 a barrel at 1:06 p.m. ET (1706 GMT).

Both contracts were on track for their first weekly gain in April. For several weeks, prices have been the most volatile since June 2020.

The New York Times reported that the European Union was moving toward adopting a phased-in ban of Russian oil, to give Germany and other countries time to arrange alternative suppliers.

A phased-in ban on Russian oil would force European buyers “to seek alternative sources, some of which in the near term is being met by Strategic Petroleum Reserve releases, but in the future, more supplies coming out of the ground will be required,” Andrew Lipow of Lipow Oil Associates in Houston said.

Russia’s Energy Ministry said it was limiting access to its statistics on oil and gas production and exports.

On Wednesday, the International Energy Agency warned that from May onwards roughly 3 million barrels per day of Russian oil could be shut in due to sanctions or buyers voluntarily shunning Russian cargoes.

Major global trading houses also plan to curtail crude and fuel purchases from Russia’s state-controlled oil companies in May, Reuters reported on Wednesday.

On Wednesday, the U.S. Energy Information Administration reported that U.S. oil stocks rose by more than 9 million barrels last week, driven partly by releases from strategic reserves.

Analysts in a Reuters poll had anticipated just an 863,000-barrel build.

U.S. oil production forecasts are being revised upwards despite labour and supply chain constraints as higher prices spur more drilling and well completion activity, according to industry experts.

However, Chinese refiners are set to cut crude throughput this month by about 6 per cent, a scale last seen in the early days of the COVID-19 pandemic two years ago, to ease bulging fuel inventories during recent lockdowns, industry sources and analysts said.

Trade was going to continue to be “somewhat nervous” as the war between Russia and Ukraine continues and as countries weigh banning Russian supplies, Price Futures Group analyst Phil Flynn said.

“The big question is going to be, how many people are going to want to be short oil going into the long weekend?”

Traders were also jockeying for position as U.S. May crude options were set to expire on Thursday.

Be smart with your money. Get the latest investing insights delivered right to your inbox three times a week, with the Globe Investor newsletter. Sign up today.