By Gina Lee
Investing.com – Oil was down on Monday morning in Asia, giving up its earlier gains as investors took profits after the previous session’s surge. However, the European Union (EU)’s impending ban on Russian crude imports is driving global supply fears.
Brent oil futures dropped 2.18% to $109.12 by 12:42 AM ET (4:42 AM GMT) and WTI futures fell 2.04% to $106.41. Both Brent and WTI benchmarks, which jumped about 4% during the previous Friday, increased by more than $1 a barrel earlier in the session, with WTI reaching its highest level since March 28 at $111.71.
"Oil markets are expected to gain this week as a pending ban by the European Union on Russian oil will further tighten global supplies of crude and fuels," Fujitomi Securities Co Ltd. chief analyst Kazuhiko Saito told Reuters.
The EU still aims to agree to a phased embargo on Russian oil within the month in response to Russia’s invasion of Ukraine on Feb. 24.
The embargo will go ahead despite concerns about supply in eastern Europe, without a delay or watered-down proposals, four diplomats and officials said on Friday.
Russia also slapped sanctions on several European energy companies and U.S. gasoline futures hit another record high on Monday as falling stockpiles fueled supply concerns.
"Oil prices remained bullish, especially WTI's near-term contract, as U.S. gasoline prices continued to rise amid weaker imports of petroleum products from Europe," said Fujitomi Securities' Saito.
On the supply side, U.S. energy firms in the week to May 13 added oil and natural gas rigs for an eighth consecutive week as high prices and prompting by the federal government saw drillers return to the wellpad.
Meanwhile, the Organization of the Petroleum Exporting Countries (OPEC) and allies (OPEC+), has been unable to meet previously agreed targets for output increases. This is due to under-investment in oilfields in some OPEC members and the more recent losses in Russian output.
According to the cartel’s latest monthly report, OPEC’s output rose by 153,000 barrels per day (bpd) to 28.65 million bpd. This lags behind the 254,000 bpd rise that OPEC is allowed under the OPEC+ deal.