Oil prices fell on Monday, paring early gains as investors took profit from a surge in the previous session, albeit in the shadow of supply fear as the European Union prepares an import ban on Russian crude and with limited increase in OPEC output, Trend reports with reference to Reuters.
Brent crude futures were down $1.66, or 1.5%, at $109.89 a barrel at 0356 GMT, while U.S. West Texas Intermediate (WTI) crude futures dropped $1.55, or 1.4%, to $108.94 a barrel.
Both benchmarks, which jumped about 4% last Friday, earlier climbed by more than $1 a barrel, with WTI reaching its highest since March 28 at $111.71.
"Investors scooped up profit after a sharp gain last Friday," said Naohiro Niimura, a partner at Market Risk Advisory.
"Still, with a planned ban by the EU on Russian oil and slow increase in OPEC output, oil prices are expected to stay close to the current levels near $110 a barrel until they head lower late this year due to weakening global demand," he said.
The European Union aims to agree a phased embargo on Russian oil this month despite concerns about supply in eastern Europe, four diplomats and officials said on Friday, rejecting suggestions of a delay or watering down proposals.
Last week, Moscow slapped sanctions on several European energy companies, causing worries about supplies.
Elsewhere OPEC+ - the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia - has been undershooting previously agreed plans for output increases due to under-investment in oilfields in some OPEC members and, more recently, losses in Russian output.
The latest monthly report from OPEC showed its output in April rose by 153,000 barrels per day (bpd) to 28.65 million bpd, lagging the 254,000 bpd rise that OPEC is allowed under the OPEC+ deal.
Adding to pressure, China processed 11% less crude oil in April than a year earlier, with daily throughput falling to the lowest since March 2020 as refiners slashed operations on weaker demand due to widespread COVID-19 lockdowns.
Meanwhile, U.S. gasoline futures set an all-time high again on Monday as falling stockpiles fuelled supply concerns.
"Oil prices will remain bullish, especially WTI's near-term contract, as U.S. gasoline prices continued to rise amid weaker imports of petroleum products from Europe," said Kazuhiko Saito, chief analyst at Fujitomi Securities.