By Gina Lee

Investing.com – Oil was up on Thursday morning in Asia, extending a cautious rally as signs of a tight market emerge. Also, there is still a clash between Hungary and Russia over plans to block imports from Russia. Russia is the second-largest oil exporter.

They were at $111.47 as of 11:51 ET (03:51 GMT), and rose 0.5% to $110.88 for July delivery.

Investors also digested Wednesday’s from the U.S. Energy Information Administration (EIA). Data from the U.S. Energy Information Administration (EIA) showed that there was a draw at 1.019million barrels for the week ending May 20, 2022. Investing.com forecasted a draw in the range of 737,000,000 million barrels. A draw of 3.394 Million Barrel was also recorded for the preceding week.

Released the previous day, it showed an increase of 567,000 barrels.

Some investors said the EIA draw and the prospect of an EU embargo on Russian oil, in retaliation for Russia’s invasion of Ukraine on Feb. 24, were pushing prices higher.

Vivek Dahar, a Commonwealth Bank Of Australia (CBA), commodities analyst told Reuters: “The biggest upside driver is an EU prohibition on Russian oil imports.”

On Wednesday, Charles Michel, President of the European Council said that he was confident an agreement could be reached prior to the next body’s meeting in May 2022. But, Hungary is a member of the European Council and could block its implementation. Hungary wants to invest EUR750 million ($801.27million), to modernize its oil refineries and build a new pipeline linking Croatia with Russia.

Even without the formal EU ban on Russian oil, there is still less Russian oil available for the market. This is because traders and buyers avoid the crude and fuel suppliers. According to ANZ analysts, cargo from Baltic ports takes longer to reach Asian refineries while French and Dutch deliveries have almost ceased.

According to CBA’s Dhar, a forecast rise in US oil production to record levels of 5.2million barrels per daily (bpd), in the Permian basin of the United States will not be enough to fill the gap of 2 million-3 million bpd due to lost Russian supplies.

However, ongoing COVID-19 lockdowns in China, the world’s biggest oil importer, that could impact fuel demand, dampened sentiment.