UPDATE 6-Oil muted as price cap proposal eases supply concerns


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      G7 price cap on Russian oil could be above current trading

      EIA gasoline stocks data shows higher than expected build

      COVID-19 controls tighten in China

 (Updates prices, adds new quote)
    By Nia Williams
       Nov 24 (Reuters) - Benchmark Brent oil edged lower on
Thursday while West Texas Intermediate (WTI) crude held steady,
hovering in sight of two-month lows as the level of a proposed
G7 cap on the price of Russian oil raised doubts about how much
it would limit supply.
    A bigger-than-expected build in U.S. gasoline inventories
and widening COVID-19 controls in China also added downward
pressure on crude prices. 
    Brent crude futures  LCOc1  were down 29 cents, or 0.3%, to
$85.12 a barrel by 15.15 p.m. ET (2015 GMT), while U.S. WTI
crude  CLc1  futures rose 2 cents, to $77.96. 
    Trading volumes were thin because of the Thanksgiving
holiday in the United States.
    Both benchmarks plunged more than 3% on Wednesday on news
the planned price cap on Russian oil could be above the current
market level. 
    European Union governments remained split over what level to
cap Russian oil prices at to curb Moscow's ability to pay for
its war in Ukraine without causing a global oil supply shock,
with more talks possible on Friday if positions converge.
    The G7 group of nations is looking at a cap on Russian
seaborne oil at $65-$70 a barrel, a European official said,
though European Union governments have yet to agree on a price. 
    A higher price cap could make it attractive for Russia to
continue to sell its oil, reducing the risk of a supply shortage
in global oil markets.
    Some Indian refiners are paying the equivalent to a discount
of around $25 to $35 a barrel to international benchmark Brent
crude for Russian Urals crude, two sources said. Urals is
Russia's main export crude.
    "The Russian price cap is another catalyst that served to
get prices lower over the last little while," said Bart Melek,
global head of commodity market strategy at TD Securities,
adding he was fairly bullish on oil despite the headwinds.
    Oil prices also came under pressure after the Energy
Information Administration (EIA) said on Wednesday that U.S.
gasoline and distillate inventories rose substantially last
week.  EIA/S  
    But crude inventories  USOILC=ECI  fell by 3.7 million
barrels to 431.7 million barrels in the week to Nov. 18,
compared with expectations for a 1.1 million barrel drop in a
Reuters poll of analysts. 
    China on Wednesday reported the highest number of daily
COVID-19 cases since the start of the pandemic nearly three
years ago. Local authorities tightened controls to stamp out the
outbreaks, adding to investor concern over the economy and fuel
 (Reporting by Ahmad Ghaddar; Additional reporting by Nia
Williams in British Columbia, Ahmad Ghaddar in London, Yuka
Obayashi in Tokyo and Muyu Xu in Singapore; Editing by
Marguerita Choy, Mark Potter and Daniel Wallis)
 ((Ahmad.Ghaddar@thomsonreuters.com; +442075424435; Reuters
Messaging: ahmad.ghaddar.thomsonreuters.com@reuters.net))

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