Oil prices edge lower on supply concerns, EU plans to phase in Russia ban

TOKYO Reuters - Oil prices fell on Monday, giving rise to earlier gains as investors took profits after a surge in the previous session, but global supply fears loomed with the European Union preparing to phase in a ban on imports from Russia.

The price of crude futures fell 64 cents, or 0.6%, to $110.91 a barrel at 0137 GMT, while the U.S. West Texas Intermediate WTI crude futures dropped 60 cents, or 0.5%, to $109.89 a barrel.

Both benchmarks, which rose about 4% last Friday, had earlier risen by more than $1 a barrel, with WTI reaching its highest since March 28 of $111.71.

Oil markets are expected to gain this week as the European Union ban on Russian oil will tighten global supplies of crude and fuels, according to Kazuhiko Saito, chief analyst at Fujitomi Securities Co Ltd.

The EU still wants to agree a phased embargo on Russia's oil this month despite concerns about supply in eastern Europe, four diplomats and officials said on Friday, rejecting suggestions of a delay or watering down proposals.

Last week, Moscow imposed sanctions on several European energy companies, which were concerned about supplies, because of its actions in Ukraine as a special military operation.

U.S. gasoline futures set a new all-time high on Monday, as falling stockpiles fuelled supply concerns.

Oil prices remained bullish, especially WTI's near-term contract, as U.S. gasoline prices continued to rise amid weaker imports of petroleum products from Europe, Fujitomi Securities' Saito said.

U.S. energy firms added oil and natural gas rigs for an eighth week in a row, as high prices and prodding by the federal government prompted drillers to return to the wellpad.

Russia and the Organization of the Petroleum Exporting Countries have been undershooting plans for output increases due to underinvestment in oilfields in some OPEC members and recent losses in Russian output.

The latest monthly report from the OPEC shows that the output of the company rose by 153,000 barrels per day bpd to 28.65 million barrels per day, which is a better than the 254,000 barrels per day rise that OPEC is allowed under the OPEC deal.