Oil eases as investors focus on EU’s embargo impasse, gasoline

Oil fell on signs the European Union is struggling to agree on an embargo on Russian imports, and as gasoline sank from last week’s record.

West Texas Intermediate eased below $110 a barrel in early Asian trading after ending little changed in Monday’s session. The 27-nation bloc is unlikely to approve the ban when leaders meet next week as Hungary opposes the measure, according to people familiar with the matter. Still, German Economy Minister Robert Habeck said he hoped to have the embargo “within days”.

US gasoline lost as much as 4 per cent in early trading after futures hit a record last Monday on strong consumption and sagging stockpiles. Demand remains robust, with weekly US imports of European gasoline soaring to a six-month high in the seven days to May 19, according to bills of lading and ship-tracking data.

US benchmark oil has traded in a narrow range either side of $110 a barrel over the past two weeks as investors weigh the fallout from the crisis in Ukraine, including moves to isolate Moscow, and the outlook for global demand. While US consumption is expected to pick up further over a busy summer-driving season, energy usage in China has been crimped by a series of harsh lockdowns in key cities to combat coronavirus outbreaks.

China’s State Council, a top government body chaired by Premier Li Keqiang, has moved to cushion the economic impact of the curbs, China National Radio reported. The support includes policies to help people buy cars, ensure cargo transport runs smoothly and increase the number of domestic flights.

Oil markets remain in backwardation, a bullish pattern in which near-term prices trade above longer-dated ones. Brent’s prompt spread – the gap between its two nearest contracts – was $2.55 a barrel, up from $2.08 a week ago.