Oil swung after European Union leaders eschewed fresh action to cut imports of Russian crude and traders weighed the outlook for demand.
West Texas Intermediate fluctuated near $ 112 a barrel after losing more than 2% on Thursday. EU leaders, along with NATO and Group of Seven members, gathered in Brussels on Thursday to assess their response to the month-old invasion of Ukraine. There’s been no consensus among the EU on cracking down on Moscow’s oil, with opposition from nations including Austria.
Still, US President Joe Biden remains in the region on Friday, and the administration may yet unveil measures to help Europe reduce flows of Russian natural gas. A senior EU official said that a political deal between Biden and the EU will pave the way for additional imports of liquefied natural gas from the US to help the bloc wean itself off imports of fuel from Russia.
“The market has taken some comfort in the fact that it looks unlikely that we see an EU ban,” Warren Patterson, head of commodities strategy at ING Groep NV. “However, I suspect that there will still be plenty of noise about further sanctions or oil bans in the days and weeks ahead; this uncertainty means that the market will likely continue to trade in a volatile manner. ”
Crude has rallied over the past four months, and hit the highest since 2008 in early March as the invasion roiled the already-tight commodity markets. In response, the US and UK have moved to bar Russian oil, and many western energy companies are also choosing to shun the nation’s crude. Buyers in Asia, including China and India, appear to be soaking up some of those barrels.
Oil markets remain backwardated, a bullish pattern marked by higher prices for near-term barrels over those further out. Brent’s prompt spread – the difference between its two nearest contracts – was $ 3.54 a barrel, up from 41 cents at the start of the year.
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