Oil eases after surging in previous session on Russia’s sanctions

Oil prices eased in early Asian trade on Thursday, taking a pause after rising more than 5% in the previous session following new Russian sanctions on some European gas companies.

On Wednesday Russia sanctioned 31 companies based in countries that imposed sanctions on Moscow after Russia invaded Ukraine in February.

That created unease in the market at the same time that Russian gas flows to Europe via Ukraine fell by a quarter. It was the first time exports via Ukraine have been disrupted since the invasion.

Brent crude futures fell 9 cents to $107.42 a barrel by 0013 GMT. WTI crude futures fell 13 cents to $105.58 a barrel.

Prices have risen over 35% so far this year, bolstered by supply concerns after Russia’s invasion of Ukraine in February.

The European Union is still haggling over an embargo on Russian oil, which analysts say would further tighten the market and shift trade flows. The vote needs unanimous support, but it has been delayed as Hungary has dug in its heels in opposition.

Price gains have been limited by worries about demand destruction in China, as it attempts to curb the spread of coronavirus.

“Until we see some significant policy support coming through in China or policymakers adopt an alternative strategy to COVID (which seems very unlikely), oil prices could remain capped near term,” said Stephen Innes, managing partner at SPI Asset Management.