Summary
- Ukraine’s attacks force Russia to shut 17% of oil-processing capacity
- Bets on Federal Reserve rate cut buoy oil demand outlook
- US market reopens on Tuesday following Labour Day break
(Reuters) – Oil prices rose almost 2% on Tuesday as concerns about supply disruptions grew amid an escalation of the conflict between Russia and Ukraine, along with speculation that OPEC+ will not raise output at a meeting on Sunday.
Brent crude was up $1.17, or 1.7%, at $69.32 a barrel by 1103 GMT, having risen just over 2% earlier.
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U.S. West Texas Intermediate crude was at $65.81 a barrel, $1.77 or nearly 2.8% higher. WTI futures did not settle on Monday due to the Labor Day holiday in the United States.
“Crude trades higher as U.S. pressure on Russia to stop the war continues, focusing on curbing supply flows to India,” Saxo Bank’s head of commodity strategy, Ole Hansen, said.
“Prices are further supported by short covering from heavily extended speculative positions in WTI and expectations that the OPEC+ meeting this weekend will keep output unchanged,” he said, adding that Brent futures could potentially rise to $70.50 before finding resistance.
Expectations of another crude draw were also boosting the market, UBS analyst Giovanni Staunovo said.
The U.S. summer driving season ended on Monday’s Labor Day holiday, signalling the end of the highest demand period in the world’s largest fuel market.
On the supply side, recent Ukrainian drone attacks shut down facilities accounting for at least 17% of Russia’s oil-processing capacity, or 1.1 million barrels per day, according to Reuters’ calculations.
Investors also await a meeting of eight members of the Organization of the Petroleum Exporting Countries and their allies on September 7 for any clues on future production plans after the OPEC+ group agreed early last month to raise oil production by 547,000 barrels per day for September.
Analysts believed the group would not unwind remaining voluntary cuts of about 1.65 million bpd in place from the eight members – including Saudi Arabia and Russia – which were supporting the market and keeping prices in the $60 a barrel range.
Oil prices could fall for a fourth straight year, averaging $55 a barrel in the last quarter of this year before OPEC+ steps in to stabilise the market into 2026 by cutting output, analysts at SEB commodities said in a note to clients.
A raft of U.S. labour data is due this week ahead of the Federal Reserve’s September meeting, which could strengthen the case for monetary easing after surprisingly weak U.S. payrolls data released in July.
Reporting by Seher Dareen in London, Anjana Anil in Bengaluru and Colleen Howe in Beijing; Editing by Muralikumar Anantharaman, Sonali Paul, Alexandra Hudson and Emelia Sithole-Matarise
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