LONDON—Oil prices edged lower on Friday but were on track for weekly gains, supported by the prospect of a tight market due to rising gasoline consumption in the United States in summer, and also the possibility of an EU ban on Russian oil.
Brent crude was down 20 cents, or 0.2 percent, at $117.20 at 1104 GMT, but was on track for a gain of about 4 percent this week.
U.S. West Texas Intermediate (WTI) crude fell 40 cents, or 0.4 percent, to $113.69 a barrel. WTI is set for a weekly gain of about 0.5 percent.
“Oil prices have risen to the highest level since end of March, benefiting from renewed declines in U.S. oil inventories,” said UBS analyst Giovanni Staunovo.
U.S. gasoline stocks fell by 482,000 barrels last week to 219.7 million barrels, U.S. Energy Information Administration said on Wednesday. The start of summer driving season in the United States normally entails increased consumption.
“The U.S. driving season and strong travel demand should help (prices). With supply growth lagging demand growth, the oil market is likely to stay undersupplied. Hence, we remain positive in our outlook for crude prices,” Staunovo added.
Both benchmark crude contracts were also supported as the European Commission continued to seek unanimous support of all 27 EU member states for its proposed new sanctions against Russia, with Hungary posing a stumbling block.
A top Hungarian aide said the country needed 3–1/2 to 4 years to shift away from Russian crude and make huge investments to adjust its economy. Hungary could not back the EU’s proposed oil embargo until there was a deal on all issues, the aide said.
“We believe that a sharp contraction in Russian oil exports could trigger a full-blown 1980s style oil crisis and push Brent well past $150 per barrel,” Bank of America said in a note.
Oil prices jumped after the Iranian revolution in 1979 and a long war between Iran and Iraq (1980–88), although a global recession soon hindered fuel demand, and oil prices dropped back.
Prices have gained about 50 percent so far this year.
