Market-pioneer Brent crude futures fell 12 cents (10p) to settle at $107.14 (£85.22) a barrel while the contract expiring the previous month rose 1 $.75 (£1.39) to settle at $109.34 (£86.95) a barrel. US crude West Texas Intermediate fell 67 cents (53p) to settle at $104.69 (£83.26) a barrel.
It comes as oil prices were hit by the US heating oil contract which fell more than 20% at one point on its expiry day.
The first month US heating oil contract, which is a proxy for diesel prices, hit a record high of $5.8595 (£4.66) a gallon before falling to $4.4067 (£3.51 £) per gallon.
Diesel futures soared as investors grew nervous about global supplies following Russia’s invasion of Ukraine.
However, Andrew Lipow of Lipow Oil Associates in Houston said the price drop could be a temporary blow due to the heating contract issue.
He said: “The fireworks were all in the expiring diesel contract.
“Today’s expiry is particularly volatile and may not reflect true tightness.”
It is likely that prices will start rising again soon due to global supply concerns among investors given the ongoing war in Ukraine.
For example, futures have risen this week on the increased likelihood that Germany will join other European Union member states in an embargo on Russian oil.
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Despite the suspension of the Nord Stream 2 pipeline, Berlin has so far been cautious about supporting a full embargo on Moscow, as it relies heavily on imported Russian oil.
Russian oil production could fall by 17% this year, according to an economy ministry document seen by Reuters on Wednesday.
This is likely to happen partly because of Western sanctions, but also because of Moscow’s decision to insist that all oil be purchased in Russian rubles.
The ruble is an unstable currency, especially right now due to Western sanctions, despite the erroneous doomsday predictions that the Russian economy would collapse.
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It is an unpopular currency with investors due to its volatility and low exchange value.
There are also concerns about Chinese demand, which could mean prices are starting to fall again.
Beijing is continuing its Dynamic Zero Covid response to the pandemic based on lockdowns, mass testing, contract tracing and quarantining positive cases.
These had led to an extensive lockdown of China’s economic capital Shanghai and the possibility of similar measures being introduced in Beijing itself.
This has already led to a drop in demand which could hurt prices even more if these measures continue.