© Reuters. FILE PHOTO: A section of the BP Eastern Trough Area Project (ETAP) oil platform is seen in the North Sea, around 100 miles east of Aberdeen in Scotland February 24, 2014. REUTERS/Andy Buchanan/pool
By Alex Lawler
LONDON (Reuters) – Oil slipped on Tuesday, pressured by COVID-19 lockdowns in China which could weigh on demand, but finding support from a possible European oil embargo on Russia over its invasion of Ukraine.
Beijing, reporting dozens of new cases daily, is mass-testing residents to avert a lockdown similar to Shanghai’s over the past month. The capital’s restaurants were closed for dining in, and some apartment blocks were sealed shut.
was down $1.22, or 1.1%, at $106.36 a barrel at 0812 GMT. US West Texas Intermediate (WTI) crude dropped 50 cents, or 0.5%, to $104.67.
“The positive driver has been the EU embargo and whether that will be announced,” said Commonwealth Bank commodities analyst Vivek Dhar.
“Your negative driver is Chinese COVID lockdowns. They’re both very important thematics.”
Oil has hit multi-year highs this year, with Brent reaching $139 in March, the highest since 2008, after Moscow’s invasion of Ukraine exacerbated supply concerns that were already fueling a rally.
The increasing prospect of EU sanctions on Russia lent support. The European Commission is expected to finalise on Tuesday work on the next package of EU sanctions against Russia, which would include a ban on buying Russian oil.
“A potential EU-wide oil embargo could significantly reduce the already diminishing availability of Russian barrels,” said Tamas Varga of oil broker PVM.
Also in focus will be the latest round of US inventory and supply reports. Five analysts polled by Reuters on average expect inventors fell by 1.2 million barrels in the week to April 29. [EIA/S]
The American Petroleum Institute industry group issues its inventory report at 2030 GMT, followed by government figures from the Energy Information Administration on Wednesday.