Crude oil futures tick lower as uncertainty lingers over EU ban on Russian oil

Crude oil futures were lower in mid-morning Asian trade May 24 as Hungary continues to hold up the EU's planned embargo on Russian oil, but some support came from a weaker US dollar and tighter US gasoline inventories.

At 10:39 am Singapore time (0239 GMT), the ICE July Brent futures contract was down 62 cents/b (0.55%) from the previous close at $112.80/b, while the NYMEX July light sweet crude contract fell 61 cents/b (0.55%) to $109.68/b.

"Crude oil prices struggled to keep their head above water as the EU's proposed ban on Russian oil looks increasingly unlikely," Brian Martin and Daniel Hynes from ANZ Research said in a May 24 note.

The EU continues to stall its unilateral decision to ban Russian oil as Hungary has been holding out on it, requesting more time to find alternative sources.

"The EU has offered to phase in the sanctions to 2024, while Hungary has indicated it needs at least Eur770 million to revamp its oil industry," Martin and Hynes added.

Meanwhile, a weaker US dollar added support, though analysts said that crude would trade rangebound.

The ICE US Dollar Index was trading at 102.325 at 10:39 pm Singapore time (0239 GMT) May 24, down 1.05% on the week.

A weaker dollar results in dollar-denominated assets like oil futures becoming more attractive to investors holding foreign currencies.

"Even a significantly weaker dollar did little to boost oil prices, which suggests WTI crude will be stuck between $103 and $115 levels," OANDA's senior market analyst Edward Moya said in a May 24 note.

Some additional support came from US gasoline inventory draws, which likely extended into the week ended May 20, analysts surveyed by S&P Global Commodity Insights said May 23.

Nationwide gasoline stockpiles are expected to have declined 500,000 barrels to around 219.7 million barrels in the week to May 20, analysts said. The draw would mark an eighth consecutive week of lower inventories and leave stocks around 7.9% behind the five-year average of US Energy Information Administration data.

Dubai crude swaps and intermonth spreads were lower in mid-morning trade in Asia May 24 from the previous close.

The July Dubai swap was pegged at $102.84/b at 10 am Singapore time (0200 GMT), down $1.00/b (0.96%) from the May 23 Asian market close.

The June-July Dubai swap intermonth spread was pegged at $3.21/b at 10 am Singapore time, down 7 cents/b over the same period, and the July-August intermonth spread was pegged at $2.52/b, down 13 cents/b.

The July Brent-Dubai EFS was pegged at $9.71/b, down 12 cents/b.