Oil reverses early gains, slips into negative territory

Oil prices reversed early gains and slipped into negative territory Tuesday, after a 7% surge the previous day, supported by supply risks from a potential European Union oil embargo on Russia and concern about attacks on Saudi oil facilities

European Union foreign ministers are split on whether to join the United States in banning Russian oil. Some countries, including Germany, say the bloc is too dependent on Russia’s fossil fuels to withstand such a step

“It is still not clear whether this will really happen,” wrote Carsten Fritsch of Commerzbank in a report, adding: “a decision of this kind requires unanimity

Brent crude declined 51 cents to $115.11 per barrel. U.S. West Texas Intermediate crude added 1.24% to trade at $110.73 per barrel

Oil was pressured by a stronger U.S. dollar, which gained after comments from U.S. Federal Reserve Chair Jerome Powell on Monday that flagged a more aggressive tightening of monetary policy than previously anticipated

A strong dollar makes crude more expensive for other currency holders and tends to weigh on risk appetite

“The word ‘transitory’ regarding inflation is a distant memory, chiefly due to rising commodity prices,” said Tamas Varga of broker PVM. “Central banks, led by the Federal Reserve stand ready to increase the cost of borrowing significantly

Brent hit $139 a barrel, the highest since 2008, earlier this month. Threats to supply from attacks by Yemen’s Iran-aligned Houthi group on Saudi energy and water desalination facilities added support

Saudi Arabia said on Monday it would not bear responsibility for any global supply shortages after the attacks by the Houthis, in a sign of growing Saudi frustration with Washington’s handling of Yemen and Iran

In focus later will be the latest round of U.S. inventory data, which analysts expect to show no change in crude oil stocks. The American Petroleum Institute, an industry group, issues its supply report later on Tuesday