On Thursday, oil prices tumbled following an ease in fears of supply disruption. Investors’ sentiment recovered on the news that the Group of Seven nations (G7) agreed a plan to impose a high price cap on Russian oil.
The rise in U.S. gasoline stocks also added to downward pressure. The recent data turned out to be greater-than-expected.
Brent and WTI oil prices fell by over 3% on Wednesday on the report that a price cap on Russian oil may be set above the current market price.
As noted by a European official, G7 is discussing a price cap on Russian oil between $65 and $70 a barrel.
According to the report of the Commonwealth Bank commodities analyst Vivek Dhar, the potential price cap on Russian seaborne oil exports exceeds market expectations. He believes that the G7 decision may result in easing concerns of supply disruption.
Another factor that contributed to the decline in oil prices was the introduction of extra COVID restrictions in China on Wednesday. Such measures were taken to curb the spread of the disease. Such news is a cause for more concerns across investors about the economy and demand for fuel.