NEW YORK: Oil prices were stable on Thursday as traders prepared for a potential halt to India’s Russian oil imports, which could reshape flows and boost demand for supplies from elsewhere. Brent crude futures were down 28 cents, or 0.45 percent, to USD61.63 a barrel at 12:40 p.m. EDT (1640 GMT).
US West Texas Intermediate futures were down 19 cents, or 0.33percent, to USD58.08. US President Donald Trump said Prime Minister Narendra Modi had pledged on Wednesday that India would stop buying from Russia, which is India’s top oil supplier, accounting for about one-third of its oil imports.
“This is a positive development for the crude oil price as it would remove a big buyer of Russian oil,” said Tony Sycamore, a market analyst at IG. Both contracts on Wednesday touched their lowest since early May on US-China trade tensions and concerns about a looming supply glut.
Some Indian refiners are preparing to cut Russian oil imports, with expectations of a gradual reduction, three sources familiar with the matter told Reuters. However, India said on Thursday that its two main goals were to ensure stable energy prices and secure supply, making no reference to Trump’s comments. Russia said it was confident that its energy partnership with India would continue.
The British government announced new sanctions on Wednesday, directly targeting Russia’s Rosneft and Lukoil - two of the world’s biggest energy companies.
Meanwhile, Russian products supply has been hampered by persistent Ukrainian drone strikes on its refineries. Russia’s energy minister said on Wednesday that Russian refineries would postpone planned maintenance to saturate the market. Ukraine attacked the Saratov refinery overnight, while Rosneft’s Ufaneftekhim halted crude processing in one of its four crude units after an attack on Wednesday.
“The plummeting availability of Russian products and crude oil ought to set a floor under the market. This year’s low of USD58.40 per barrel for Brent, reached in April, may well prove a cumbersome task to breach,” said PVM analyst Tamas Varga.
Elsewhere, a US report showing bigger-than-expected crude inventories as refineries go into fall turnarounds weighed on prices. The Energy Information Administration said US crude inventories increased by 3.5 million barrels to 423.8 million barrels last week, compared with analysts’ expectations in a Reuters poll for a 288,000-barrel rise. “A modestly bearish report, with a large crude build being offset by a large distillate draw, but with implied oil demand considerably weaker than last week,” said UBS analyst Giovanni Staunovo.
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