Oil Drops as EU Bans Russian Supplies Amid Hungarian Resistance By Investing.com

© Reuters.

By Gina Lee

Investing.com – Oil was lower Tuesday morning in Asia, opening lower earlier in the session. The European Union’s (EU) decision to ban imports of Russian oil, which would tighten global supply, has come up against .

edged down 0.18% to $114.03 at 12:17 a.m. ET (4:17 GMT) and edged down 0.20% to $111.60.

EU foreign ministers on Monday failed in their attempts to get Hungary to lift its veto on the bloc’s proposed oil embargo against Russia in response to the February 24 invasion of Ukraine. This leaves the EU without the full approval of all EU countries needed for the embargo to apply.

On the demand side, investors continued to digest Monday’s Chinese data that showed the economy processed 11% less crude oil in April than a year earlier. As COVID-19 lockdowns remain in place, daily throughput has fallen to the lowest since March 2020 as refiners scaled back operations due to lower consumption.

However, as Chinese demand declines, U.S. producers are ramping up production to replenish inventories that have dwindled thanks to the war in Ukraine and the recovery from COVID-19. Strategic Petroleum Reserve inventories fell to 538 million barrels, the lowest since 1987, according to data from the US Department of Energy on Monday.

Meanwhile, oil production in the Permian in Texas and New Mexico, the largest U.S. shale oil basin, is expected to rise 88,000 barrels per day (bpd) to a record 5.219 million bpd in June 2022, according to US Energy Information Administration (EIA) productivity. report said Monday.

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Laura T. Thrasher