Oil Prices Fall Due to Profit-taking, But Supply Concerns Persist

Oil prices declined on Monday, erasing earlier gains as speculators booked profits following the previous session's jump, but global supply concerns persisted as the European Union prepared to phase out imports from Russia.

At 01:37 GMT, Brent crude futures decreased 64 cents, or 0.6%, to $110.91 per barrel, while U.S. West Texas Intermediate (WTI) crude futures decreased 60 cents, or 0.5%, to $109.89 per barrel.

Both benchmarks gained by around 4 percent on Friday, with WTI reaching its highest level since March 28 at $111.71 per barrel.

The chief analyst of Fujitomi Securities Co Ltd, Kazuhiko Saito, expects oil markets to rise this week due to an impending ban on Russian oil by the European Union, which will further constrict global crude and fuel supply.

Despite concerns over supplies in eastern Europe, the EU still intends to approve a phased embargo on Russian oil this month, four diplomats and officials said on Friday, dismissing suggestions of a delay or watering down of proposals.

Moscow, which describes its efforts in Ukraine as a "special military operation," sanctioned numerous European energy businesses last week, prompting supply concerns.

In the meantime, U.S. gasoline futures established a new record high on Monday as dwindling inventories fueled supply fears.

Saito of Fujitomi Securities stated, "Oil prices remained bullish, especially WTI's near-term contract, as U.S. gasoline prices continued to grow despite decreased imports of petroleum products from Europe."

On the supply side, U.S. energy businesses added oil and natural gas rigs for the eighth consecutive week in the week ending May 13, as high prices and government encouragement spurred drillers to return to the wellpad.

Elsewhere Due to under-investment in oilfields by several Organization of the Petroleum Exporting Countries (OPEC) members and, more recently, output losses by Russia, OPEC+ has fallen short of previously agreed-upon targets for output increases.

OPEC's output in April increased by 153,000 barrels per day (bpd) to 28.65 million bpd, falling short of the 254,000 bpd increase permitted under the OPEC+ agreement.