Oil prices edged down on May 27; however, they are going to increase in a week thanks to a jump in gasoline consumption in the United States in summer. The increase also will be affected by the probable EU’s ban on Russian oil.
Brent crude decreased 20 cents, 0.2%, to US$117.20 at 11.04 am GMT; yet, it is about to increase 4% this week.
US West Texas Intermediate (WTI) crude has a drop of 40 cents to US$113.69 per barrel. It is also evaluated that WTI will gain a 0.5-percent in this week.
Giovanni Staunovo, the UBS analyst, said since the end of March oil prices have soared to the highest level thanks to renewed drop in the US oil inventories.
Last week, gasoline stocks of the U.S. saw a decrease by 482,000 barrels to 219.7 million barrels, according to the recent US Energy Information Administration. As of summer, the country will normally see an increase in consumption.
Staunovo said the increased driving in travel season should be helpful. The oil industry will face insufficient supply following the increasing demand.
Thanks to the unanimous support of all 27 EU member states to propose fresh sanctions on Russia, benchmark crude pacts were also supported. Hungary failed to support the EU's oil sanctions. It will take the European country 3.5 to 4 years to retreat from the Russian crude oil and invest on modifying its economy, said a top Hungarian aide.
In a note, the Bank of America remarked, “We believe that a sharp contraction in Russian oil exports could trigger a full-blown 1980s style oil crisis and push Brent well past US$150 per barrel".
The Organization of the Petroleum Exporting Countries Plus (OPEC+) has planned to maintain the last year’s oil production deal obtained at June 2nd. It is also set to increase production objectives for July by 432,000 barrels a day. As a result, western requests for a faster increase to bring down surging prices would be rejected by OPEC+.