By Florence Tan
SINGAPORE (Reuters) -Oil prices were little changed on Monday as expectations of U.S. President-elect Donald Trump relaxing curbs on Russia’s energy sector in exchange for a deal to end the Ukraine war offset concern of supply disruption from harsher sanctions.
futures dropped 6 cents, or 0.07%, to $80.73 a barrel by 0229 GMT after closing down 0.62% in the previous session.
U.S. West Texas Intermediate crude, which expires on Tuesday, was at $77.98 a barrel, up 10 cents, or 0.13%, after settling down 1.02% on Friday. The more active April contract fell 1 cent to $77.38 a barrel.
Both contracts gained more than 1% in their fourth successive weekly ascent after the Biden administration sanctioned more than 100 tankers and two Russian oil producers. That led to a scramble by top buyers China and India for prompt oil cargo and a rush for ship supply as dealers of Russian and Iranian oil sought unsanctioned tankers to ferry their load.
The new sanctions are seen curtailing supply, at least in the near term, analyst Tim Evans said in newsletter Evans on Energy.
“Higher tanker rates on unencumbered vessels and a widening backwardation in calendar spreads have been among the notable ripple effects, reinforcing the concern over supplies,” he said.
Backwardation refers to prompt prices being higher than those in future months, indicating tight supply.
The prompt Brent monthly spread widened in backwardation by 5 cents to $1.27 a barrel on Monday. The WTI spread was at 63 cents a barrel, up 14 cents.
While the new sanctions could impact the supply of nearly 1 million barrels per day of oil from Russia, recent price gains could be short lived depending on Trump action, ANZ analysts said in a client note.
Trump has promised to help end the Russia-Ukraine war quickly, which could involve relaxing some curbs to enable an accord, they said.
The incoming president, who will be inaugurated later on Monday, is also widely expected to make a flurry of policy announcements in the first hours of his second term, including an end to a moratorium on U.S. liquefied export licences – part of a wider strategy to strengthen the economy.
Easing tension in the Middle East also capped oil’s gains.
Hamas and Israel exchanged hostages and prisoners on Sunday that marked the first day of a ceasefire after 15 months of war.