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Brent crude futures fell $2, or 2.26%, to $86.36 a barrel at
1153 GMT, while U.S. West Texas Intermediate (WTI) crude futures
were down $1.57, or 1.94%, at $79.38 a barrel.
Both contracts rose by more than $1/bbl earlier in the day, but
"pared gains following reports that the G7 price cap on Russian
oil could be above the level it is trading at the moment", said
Giovanni Staunovo, commodity analyst at UBS.
G7 nations are looking at a price cap on Russian seaborne oil in
the range of $65-70/bbl, according to a European official on
Wednesday.
Meanwhile, Urals crude delivered to northwest Europe <URL-NWE-E>
is trading around $62-$63/bbl, although it is higher in the
Mediterranean at around $68/bbl, according to Refinitiv data.
A senior U.S. Treasury official said on Tuesday that the price
cap will probably be adjusted a few times a year.
The news added to demand concerns relating to top crude oil
importer China, which has been grappling with a surge in
COVID-19 cases, with Shanghai tightening rules late on Tuesday.
Also adding pressure was an OECD economic outlook that sees a
deceleration in global economic expansion next year.
"On the bright side, the OECD does not envisage a global
recession and maybe this helped oil prices and stocks strengthen
further," said analyst Tamas Varga at PVM Oil Associates.
The market also awaits the minutes from the U.S. Federal
Reserve's November policy meeting due at 1900 GMT for clues on
possible economic contraction and further rate hikes, Varga
said.
The price decline was limited by a fall in U.S. crude
inventories, which were down by about 4.8 million barrels for
the week ended Nov. 18, data from the American Petroleum
Institute showed, according to market sources. [API/S]
U.S. stock data from the Energy Information Administration (EIA)
is due at 10:30 a.m. (1530 GMT) on Wednesday.
(Additional reporting by Sonali Paul in Melbourne and Isabel Kua
in Singapore; editing by Jason Neely, Emelia Sithole-Matarise
and Louise Heavens)
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