Oil futures: Brent above $121/b as EU struggles on sanctions compromise

Quantum Commodity Intelligence - Crude oil prices were trading higher Monday, extending the previous week's strong gains as EU talks to implement a ban on Russian oil remained deadlocked.

Front-month July ICE Brent futures were trading at $121.63/b (1715 GMT), compared to Friday's settle of $119.43/b, while the more-liquid August contract was trading at $117.52/b as the front-month spread topped $4/b.

At the same time, July NYMEX WTI was trading $116.81/b, versus Friday's settle of $115.07/b.

The EU failed to agree on the proposed ban on Russian oil imports over the weekend, while talks continued Monday as leaders met for an extraordinary summit.

The bloc aims to agree on an "orderly" transition to phase out Russian crude imports within six months and refined products by the end of the year.

The initial deal is expected to allow Hungary, Slovakia and the Czech Republic to receive Russian crude via the Druzhba pipeline until alternative supplies can be arranged.

"Despite concessions provided to Hungary, which would exclude oil that flows through the Druzhba pipeline from the ban, Hungary is still blocking the agreement," noted Warren Patterson, head of ING's commodity research.

Hungarian Prime Minister Viktor Orban warned Monday as he arrived at a summit of EU leaders that the bloc has yet to come up with a compromise that could see him back an embargo on Russian oil.

Meanwhile, OPEC+ meets later this week, but the group is widely expected to continue with the current policy, despite falling way behind on output targets. 

"No supply help should be expected from OPEC+, as the group is likely to stick to the monthly increase of 432,000 bpd for July at its meeting on 2 June, which should not come as a surprise," said Stephen Innes, managing partner SPI Asset Management.

Authorities in Shanghai confirmed they would go ahead with easing some Covid-19 lockdown measures imposed on businesses from Wednesday. The commercial centre has been under a strict lockdown for two months.

Beijing has reopened parts of its public transport system and some shopping malls and other venues as infections ease.

Hurricane Agatha, the first this season in the Pacific Ocean, was not seen as an immediate threat to the oil and gas industry, although there is a small chance it could cross Mexico and reemerge in the Gulf of Mexico.