Melbourne — Oil prices rose on Tuesday, extending gains from the previous session, as the EU firmed up plans to tighten sanctions on Russia this week, with Germany saying it was prepared to back an immediate embargo on Russian oil.
Brent crude futures rose 25c, or 0.2%, or $107.83 a barrel at 2.34am GMT, while US West Texas Intermediate (WTI) crude futures climbed 17c, or 0.2%, to $105.34 a barrel.
“Crude prices are up after comments from Germany’s economy minister, which noted that the EU plans to ban Russian oil imports either immediately or in a few months,” said Stephen Innes, managing partner at SPI Asset Management.
The European Commission is expected to finalise work on Tuesday on a sixth package of EU sanctions against Russia over its military actions in Ukraine, which would include a ban on buying Russian oil. The embargo may spare Hungary and Slovakia, both heavily dependent on Russian crude, two EU officials said on Monday.
Tight fuel product supplies are adding to demand for crude, which helped drive up Brent and WTI by more than 40c on Monday after a volatile session.
Record exports from the US Gulf are eating into supplies to the domestic US market, ANZ Research analysts said in a note. ANZ said that according to the cargo-tracking service Vortexa Analytics at least 2-million barrels a day of petrol, diesel and jet fuel flowed out of refineries in the US Gulf in April.
As a result, ANZ said the diesel crack spread, the margin on refining a barrel of oil into fuel products, widened to $73.50 a barrel, the highest since 1986.
Traders will be closely watching US inventory data, with the American Petroleum Institute industry group reporting stockpiles for the week ended April 29 on Tuesday followed by government data from the energy information administration on Wednesday.
Five analysts polled by Reuters on average expected US crude inventories fell by 1.2-million barrels in the week to April 29. They also forecast distillate inventories, which include diesel and heating oil, declined by 1.2-million barrels, while petrol stockpiles fell by 300,000 barrels.