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Brent crude futures gained 87 cents, or 0.8%, to $114.90 a
barrel at 1001 GMT. U.S. West Texas Intermediate (WTI) crude
futures climbed $1.02, or 0.9%, to $111.35 a barrel.
A bigger-than-expected drawdown in U.S. crude inventories in the
week to May 20, following soaring exports, buoyed the market on
Wednesday. U.S. refiners picked up the pace of activity,
boosting overall capacity use to the highest levels since before
the pandemic. [EIA/S]
"The fundamental backdrop ... is getting price supportive as the
driving season is approaching and will turn even more bullish
once the EU sanctions on Russian oil sales are endorsed by all
parties involved," PVM Oil's Tamas Varga said.
European Council President Charles Michel on Wednesday said he
is confident that an agreement can be reached before the
council's next meeting on May 30.
Germany's economy minister Robert Habeck said the EU can still
strike a deal on an oil embargo in the coming days or look to
"other instruments" if no agreement is reached.
However, Hungary remains a stumbling block to the unanimous
support needed for EU sanctions. Hungary is pressing for about
750 million euros ($800 million) to upgrade its refineries and
expand a pipeline from Croatia to enable it to switch away from
Russian oil.
Even without a formal ban, much less Russian oil is available to
the market as buyers and trading houses avoid dealing with crude
and fuel suppliers from the country.
Russia's oil production is expected to decline to 480-500
million tonnes this year from 524 million tonnes in 2021, Deputy
Prime Minister Alexander Novak said, state-run news agency RIA
reported on Thursday.
There are also other factors that are favouring further upside
to oil prices.
"Shanghai is preparing to reopen after a two-month lockdown,
while the U.S. peak driving season begins with the Memorial Day
weekend, which could provide a fillip to oil demand," said
Sugandha Sachdeva, vice president of commodities research at
Religare Broking, referring to the U.S. holiday on Monday.
"All of the variables are pointing to further gains in oil
prices going ahead."
($1 = 0.9348 euros)
(Additional reporting by Sonali Paul in Melbourne and Mohi
Narayan in New Delhi;Editing by Elaine Hardcastle)
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