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TOKYO, Nov 24 Reuters Oil declined on Thursday, hovering around twomonth lows, as the Group of SevenG7 nations39; proposed range for a price cap on Russian oil was higher than current trading levels, alleviating concerns over tight supply.

A greaterthanexpected build in U.S. gasoline inventories and widening COVID19 controls in China added to downward pressure.

Brent crude futures dipped 50 cents, or 0.6, to 84.91 a barrel by 0702 GMT, while U.S. West Texas Intermediate WTI crude futures fell by 46 cents, or 0.6, to 77.48 a barrel.

Both benchmarks plunged more than 3 on Wednesday on news the planned price cap on Russian oil could be above the current market level.

The G7 is looking at a cap on Russian seaborne oil at 6570 a barrel, according to a European official, though European Union governments have not yet agreed on a price.

A higher price cap could make it attractive for Russia to continue to sell its oil, reducing the risk of a supply shortage in global oil markets.

That range would also be higher than markets had expected, reducing the risk of global supply being disrupted, said Vivek Dhar, a commodities analyst at Commonwealth Bank in a report.

If the EU agree to an oil price cap of 6570bbl this week, we see downside risks to our oil price forecast of 95bbl this quarter,…