Oil prices fall on profit taking, supply fears persist

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An aerial view shows an oil facility of Idemitsu Kosan Co. in Ichihara, east of Tokyo, Japan November 12, 2021, in this photo taken by Kyodo. Mandatory Credit Kyodo/via REUTERS

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TOKYO, May 16 (Reuters) – Oil prices fell on Monday, giving up earlier gains as investors took profits after rising in the previous session, but global supply fears loomed, the European Union preparing to gradually ban imports from Russia.

Brent crude futures fell 64 cents, or 0.6%, to $110.91 a barrel at 0137 GMT, while US West Texas Intermediate (WTI) crude futures fell 60 cents, or 0.5%, to $109.89 a barrel.

Both benchmarks, which jumped around 4% last Friday, had previously risen more than $1 a barrel, with WTI hitting its highest level since March 28 at $111.71.

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“Oil markets are set to gain this week as an impending European Union ban on Russian oil will further tighten global crude and fuel supplies,” said Kazuhiko Saito, chief analyst at Fujitomi Securities Co Ltd.

The EU is still aiming to agree a phased embargo on Russian oil this month despite concerns over supplies in Eastern Europe, four diplomats and officials said on Friday, rejecting suggestions of delay or watering down of the proposals. Read more

Last week, Moscow – which calls its actions in Ukraine a “special military operation” – imposed sanctions on several European energy companies, sparking supply concerns. Read more

Meanwhile, U.S. gasoline futures hit another record high on Monday as falling inventories stoked supply concerns.

“Oil prices remained bullish, particularly the WTI short-term contract, as U.S. gasoline prices continued to rise amid falling petroleum product imports from Europe,” said Saito of Fujitomi Securities.

On the supply side, U.S. energy companies in the week to May 13 added oil and gas rigs for an eighth consecutive week as high prices and federal government incentives prompted drillers to return at the borehole.

Elsewhere, OPEC+ – the Organization of the Petroleum Exporting Countries (OPEC) and its allies including Russia – has exceeded previously agreed plans to increase production due to underinvestment in some members’ oil fields. OPEC and, more recently, Russian production losses.

OPEC’s latest monthly report showed its production in April rose by 153,000 barrels per day (bpd) to 28.65 million bpd, lagging the 254,000 bpd hike authorized by OPEC under the OPEC+ agreement. Read more

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Reporting by Yuka Obayashi; Editing by Kenneth Maxwell

Our standards: The Thomson Reuters Trust Principles.

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