Oil inched up amid controversy over Russia’s oil price cap

© Reuters. A view shows the bulk cargo ship Yan Dun Jiao 1 at the Vostochny container port on the shores of the Gulf of Nakhodka near the port city of Nakhodka, Russia August 12, 2022. REUTERS/Tatiana Meel

By Sonali Paul

MELBOURNE (Reuters) – Oil rose in early Friday trading, cutting some of its losses for the week on concerns about Chinese demand and expectations of a high price ceiling set by Group of Seven (G7) nations. Russia’s oil plan will keep supplies flowing.

Futures were up 13 cents, or 0.2%, to trade at $85.47 a barrel by 0121 GMT.

U.S. West Texas Intermediate (WTI) crude oil futures were up 35 cents, or 0.5%, from nearly $78.32 a barrel on Wednesday. No WTI deal on Thursday due to US Thanksgiving holiday.

Both contracts are headed for a third straight week of losses, on track to drop about 2% on concerns about easing tight supply.

G7 and European Union diplomats discussed a price ceiling for Russian oil of between $65 and $70 a barrel, with the aim of limiting revenue to finance Moscow’s military offensive in Ukraine. without disrupting the global oil market.

“The market thinks (the price ceiling) is too high, which reduces the risk of Moscow retaliation,” ANZ Research analysts said in a note to clients.

Russian President Vladimir Putin has said Moscow will not supply oil and gas to any country participating in the price ceiling, something the Kremlin reiterated on Thursday.

ANZ also said there are signs that a surge in COVID-19 cases in China, the world’s top oil importer, is starting to affect fuel demand, with reduced traffic and implies oil demand of about 13 million barrels per day, or less than 1 million barrels per day. than average.

“This remains a drag on oil demand, which, combined with the weakening of the US dollar, is creating a negative backdrop for oil prices,” ANZ said in a separate commodity note.

Trading is expected to remain cautious ahead of a deal on a price ceiling, which will come into effect on December 5 when the EU’s ban on Russian crude begins, and ahead of the Organization’s next meeting. The Petroleum Exporting Countries and their allies, known as OPEC+, on December 4.

In October, OPEC+ agreed to reduce its output target of 2 million barrels per day until 2023, and Saudi Arabia’s Energy Minister, Prince Abdulaziz bin Salman, was quoted as saying this week that OPEC+ was ready to cut. reduce production further if necessary.

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