Oil futures traded lower Wednesday as investors kept tabs on Group of Seven talks on a price cap for Russian oil.
West Texas Intermediate crude for January delivery
fell $1.70, or 2.1%, to $79.25 a barrel on the New York Mercantile Exchange.
January Brent crude
the global benchmark, was down $2.08, or 2.4%, at $86.28 a barrel on ICE Futures Europe, while February Brent
the most actively traded contract, was off $1.67, or 1.9%, at $86.03 a barrel.
Back on Nymex, December gasoline
fell 3% to $2.465 a gallon, while December heating oil
was down 0.6% at $3.449 a gallon.
December natural gas
jumped 7.4% to $7.283 per million British thermal units.
The U.S. and its allies could agree as early as Wednesday on a price cap for Russian oil, The Wall Street Journal reported, with officials discussing a level around $60 a barrel. The cap still could be set as high as $70, according to the report.
The Journal said U.S. officials want to set the cap high enough to provide Russia incentive to keep selling crude on to the global market, with prewar prices of around $65 a barrel for Russian crude seen as a potential benchmark. Russian oil has traded at around a $26 a barrel discount to Brent in recent days, the report said, citing Refinitiv data.
Oil remains rangebound “between $78 and $93 (on a closing basis) with Russia’s response to the EU and G-7 policies a bullish wild card to watch in early December,” wrote analysts at Sevens Report Research, in a Wednesday note.
“At this time, Russia has said they will not sell oil to any nation cooperating with the price cap and the impact of that on global markets is unclear. It could have limited impact if Russia continues to sell oil to China and India, however, if the G-7 are successful in specifically getting those two nations on board with the cap then Russia may just cut exports and store oil causing a potential bullish supply side shock to the market,” they said. “The next two weeks in the oil markets are unlikely to be dull.”
The American Petroleum Institute late Tuesday said U.S. crude inventories fell by 4.8 million barrels last week, according to news reports, while gasoline inventories dropped 400,000 barrels.
Official figures from the Energy Information Administration are due Wednesday morning. Analysts surveyed by The Wall Street Journal, on average, look for crude supplies to fall by 800,000 barrels, while gasoline supplies are expected to show a drop of 200,000 barrels.