Oil holds gain as US signals further sanctions against Russia

Oil held an advance as the US indicated that a softer market may allow for further sanctions on Russia’s energy sector.

West Texas Intermediate traded above $70 a barrel, after rising 2.5% on Wednesday, while Brent closed near $73. US Treasury Secretary Janet Yellen said that relatively low prices might allow further action against Russia’s ability to raise war revenue from its energy sector. The Biden administration is weighing new, harsher sanctions, according to people familiar with the matter.

Oil has traded within a tight range in the past two months as traders weigh geopolitical shocks against waning global demand and expectations of a global glut. It found some support from wider markets on Wednesday, after benign US inflation data supported expectations for an interest rate cut in the largest oil consumer this month.

Official US data on Wednesday pointed to a big draw in inventories at Cushing, Oklahoma — the delivery point for WTI — but also showed production rising to a new peak. Meanwhile, OPEC again cut its projections for global demand growth this year and next, ahead of a market outlook by the Energy Administration later on Thursday.