Oil prices extend losses as supply disruption fears ease

While crude supply disruptions remain the market's main concern, tightening diesel supplies have emerged as another source of pressure as disruptions to energy infrastructure in the Middle East and Russia constrain fuel availability.

European gasoil futures LGOc1, a benchmark for diesel prices, settled at a record high on Tuesday. US ultra-low sulfur diesel futures HOc1 also settled at a record high.

"Product tightness could easily become a bigger issue than crude supply itself in the near term, especially with Russian refining capacity also constrained," Waterer said.

A Ukrainian drone attack damaged a refinery in the Russian city of Yaroslavl, causing a fire that was later extinguished, regional Governor Mikhail Yevrayev said on Thursday.

Goldman Sachs said in a note that concerns over diesel shortages and the resulting price rally had encouraged refiners to prioritise diesel production over gasoline.