Oil inches up amid wrangling over Russian oil price cap

Reuters

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    By Sonali Paul
       MELBOURNE, Nov 25 (Reuters) - Oil rose in early trade on
Friday, trimming some of the week's losses which have been
driven by worries about Chinese demand and expectations a high
price cap planned by the Group of Seven (G7) nations on Russian
oil will keep supply flowing.
    Brent crude  LCOc1  futures inched up 13 cents, or 0.2%, to
trade at $85.47 a barrel at 0121 GMT.
    U.S. West Texas Intermediate (WTI) crude  CLc1  futures
jumped 35 cents, or 0.5%, from Wednesday's close to $78.32 a
barrel. There was no WTI settlement on Thursday due to the U.S.
Thanksgiving holiday.
    Both contracts were headed for their third consecutive
weekly decline, on track to fall about 2% with worries about
tight supply easing.
    G7 and European Union diplomats have been discussing a price
cap on Russian oil of between $65 and $70 a barrel, with the aim
of limiting revenue to fund Moscow's military offensive in
Ukraine without disrupting global oil markets.
    "The market considers (the price caps) too high which
reduces the risk of Moscow retaliating," ANZ Research analysts
said in a note to clients.
    Russian President Vladimir Putin has said Moscow will not
supply oil and gas to any countries that join in imposing the
price cap, which the Kremlin reiterated on Thursday.
    ANZ also said there are signs that a surge in COVID-19 cases
in China, the world's top oil importer, is starting to hit fuel
demand, with traffic drifting down and implied oil demand around
13 million barrels per day, or 1 million bpd lower than average.
    "This remains a headwind for oil demand that, combined with
weakness in the U.S. dollar, is creating a negative backdrop for
oil prices," ANZ said in a separate commodity note.
    Trading is expected to remain cautious ahead of an agreement
on the price cap, due to come into effect on Dec. 5 when an EU 
ban on Russian crude kicks off, and ahead of the next meeting of
the Organization of the Petroleum Exporting Countries and
allies, known as OPEC+, on Dec. 4.
    In October, OPEC+ agreed to reduce its output target by 2
million barrels per day through 2023, and Saudi Arabian Energy
Minister Prince Abdulaziz bin Salman was quoted saying this week
that OPEC+ was ready to cut output further if needed.
 (Reporting by Sonali Paul in Melbourne; Editing by Edwina
Gibbs)
 ((Sonali.Paul@thomsonreuters.com; +61 407 119 523))

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