WASHINGTON (DTN) -- Reversing an earlier advance, oil futures nearest delivery on the New York Mercantile Exchange and Brent crude traded on the Intercontinental Exchange fell on Tuesday after European Union proposed a phased-out ban on imports of Russian coal as a direct response to reports Russian forces have now committed war crimes in Ukraine, while once again brushing aside sanctions against Russian oil and gas exports.
The proposed restrictions on coal, which European Commission President Ursula von der Leyen said would amount to $4.4 billion a year, would allow for a three-month wind down before a ban on all new contracts, according to European wire services. The coal measures were added to a package of steps aimed at strengthening existing sanctions and correcting loopholes that were set to be debated on Wednesday by EU ambassadors.
The European Commission is also proposing to ban most Russian trucks and ships from entering the bloc, von der Leyen said, with exceptions allowed for agricultural products, humanitarian aid and energy.
"These atrocities cannot and will not be left unanswered," von der Leyen said.
The EU, however, isn't planning to sanction imports of Russian oil or gas despite growing public pressure to stop all energy trade with Moscow. EU has so far been deeply split over the next steps and some governments are continuing to push for at least a signal this week that the bloc is looking to reduce Russian oil imports.
"We are working on additional sanctions including on oil imports and we are reflecting on some of the ideas presented by the member states, such as taxes or specific payment channels such as an escrow account," von der Leyen said.
Germany appears to be the key opponent of stricter measures, with about half of Germany's imports of gas and hard coal, and about one-third of its oil imports originating in Russia. In total, Germany depends on Russia for about one-third of its total energy consumption. Should Germany cut off Russian gas imports, it would mostly affect the industrial backbone of the German economy -- a step politicians have been reluctant to take. Instead, Germany expelled 40 Russian diplomats and Lithuania threw out its Russian ambassador in the aftermath of Bucha massacre.
The United States and United Kingdom have already moved to ban Russian oil and mounting civilian casualties in Ukraine are piling pressure on governments to take further steps against Russia.
Aside from war in Ukraine, the Organization of the Petroleum Exporting Countries continued to struggle to meet their production quota in March, with the producer group managing to raise output by just 90,000 barrels per day (bpd), according to surveys from Reuters and Bloomberg. The alliance agreed to increase production by 400,000 bpd last month -- a rolling monthly target that has been consistently missed since the second half of 2021. Outages in some African members partly offset increases by Saudi Arabia and other Gulf producers.
Domestically, U.S. commercial crude oil inventories are estimated to have fallen 1.6 million barrels (bbl) for the week ended April 1, with expectations ranging from a decrease of 3.5 million bbl to an increase of 1.5 million bbl. Both gasoline and distillate fuel stockpiles are expected to have declined by 200,000 bbl from the previous week. Refinery use likely to have risen 0.3% from the previous week to 92.4% of capacity.
The closely watched survey from the American Petroleum Institute is scheduled for release 4:30 p.m. EDT, followed by weekly data from the U.S. Energy Information Administration Wednesday morning.
On the session, NYMEX May West Texas Intermediate futures fell $1.32 to $101.96 bbl, with losses accelerating post-settlement, and the ICE June Brent contract declining to $106.64 bbl, down $0.89. NYMEX May ULSD futures dropped 7.79 cents to $3.4682 gallon, and the May RBOB contract retreated 3.32 cents to $3.1649 gallon.
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