Oil prices gained on Tuesday, extending gains from the previous session, as the European Union firmed up plans to increase sanctions on Russia this week, with Germany indicating that it was willing to support an immediate oil embargo.
At 0234 GMT, Brent crude prices were up 25 cents, or 0.2 percent, to $107.83 a barrel, while WTI crude futures were up 17 cents, or 0.2 percent, to $105.34 a barrel.
“Crude prices are up after comments from Germany’s economy minister, which noted that the EU plans to ban Russian oil imports either immediately or in a few months,” said Stephen Innes, managing partner at SPI Asset Management.
On Tuesday, the European Commission is expected to complete work on the sixth package of EU sanctions against Russia for its actions in Ukraine, which will include a ban on buying Russian oil.
Two EU officials indicated on Monday that the embargo could spare Hungary and Slovakia, which are both highly reliant on Russian petroleum.
Tight gasoline product supplies are driving up oil demand, which helped Brent and WTI by more than 40 cents after a tumultuous day on Monday.
In a report, ANZ Research analysts noted that record shipments from the US Gulf are depleting supply to the local US market. According to ANZ, at least 2 million barrels per day of gasoline, diesel, and jet fuel flowed out of refineries in the US Gulf in April, according to cargo tracking provider Vortex Analytics.
As a result, ANZ reported that the diesel crack spread, or the difference between the cost of refining a barrel of oil into fuel products, has widened to $73.50 per barrel, the largest level since 1986.
Traders will be paying particular attention to U.S. inventory data, which will be released by the American Petroleum Institute on Tuesday, followed by official data from the Energy Information Administration on Wednesday.
In the week ending April 29, five experts polled by Reuters predicted U.S. crude inventories to fall by 1.2 million barrels on average.
They also predicted a 1.2 million barrel drop in distillate inventories, which include diesel and heating oil, and a 300,000 barrel drop in gasoline inventories.