Oil Futures: Prices Ease Further Amid Stalled Russian Price-cap Talks

Crude oil futures in Asian trading hours Thursday were slightly lower after EU members failed to agree on a level for the Russian price cap, while discussions are expected to resume later Thursday.

Front-month January ICE Brent futures were trading at $84.73/b (0700 GMT), compared to Wednesday's settle of $85.41/b. Brent was trading around $89.50/b prior to news of the higher price cap proposals.

At the same time, Jan23 NYMEX WTI was trading $77.44/b versus Wednesday's settle of $77.94/b.

Prices have retreated sharply since reports emerged that a higher-than-expected level of $65 to $70 per barrel was under consideration, rather than the $60/b touted by both Us and EU officials.

"A G7 price cap is reportedly being considered in the $65-70/b range, higher than expected and similar to the discount Russian crude trades. Hence traders pared longs, thinking the cap would have little bite to impact Russian Crude exports materially," said Stephen Innes, managing partner SPI Asset Management.

Urals is currently available at discounts of around $20/b to Dated Brent, which at current levels puts the Russian grade firmly within the $65-$70/b range.

Wranglings over the price ceiling have completely overshadowed this week's EIA data release, which revealed US commercial crude inventories fell 3.7 million barrels last week on a swift recovery in refinery run rates, while another 1.6 million barrels were drained from strategic reserves.

US commercial crude stocks stood at 431.7 million barrels as of 18 November, around 0.5% below last year and 4.2% under the five-year average.

US gasoline stocks, however, climbed for the second consecutive week as domestic demand slumped to its lowest since early October.