LONDON: Oil extended gains on Tuesday after a drone attack on an oil pipeline pumping station in Russia reduced flows from Kazakhstan, though prices were kept in check by the prospect of rising supply.
Brent crude futures gained 44 cents, or 0.6%, to $75.66 per barrel by 1014 GMT.
U.S. West Texas Intermediate crude futures were up 91 cents from Friday’s close to $71.65 a barrel. There was no settlement for WTI on Monday because of the U.S. Presidents’ Day holiday.
“The overriding theme driving oil prices lately has been around supply expectations. With the weakness in prices over past weeks, news of a drone strike on Kazakhstan’s export pipeline in Russia has provided the catalyst for some bearish sentiment to unwind,” said IG market strategist Yeap Jun Rong.
A senior Russian official said on Tuesday that Ukrainian drones had attacked a Russian pipeline that pumps about 1% of global crude supply.
The damage could reduce oil transit volumes from Kazakhstan by about 30% and take up to two months to deal with, Russian oil transport company Transneft said.
Oil prices steady as Russia-Ukraine peace talks loom
“However, longer-term gains are likely to remain capped as the market may anticipate higher supplies from OPEC+ and Russia further down the road while improvement in the demand outlook, particularly from China, remains uncertain,” IG’s Yeap said.
BMI analysts expect Brent prices to average $76 a barrel in 2025, down 5% from the 2024 average, because of oversupply, tariffs and trade tensions, they said in a note.
OPEC+ producers are not considering delaying a series of monthly oil supply increases scheduled to begin in April, a Russian state media report said.
In December OPEC had pushed back a plan to begin raising output to April, citing weak demand and rising supply outside the group.
Markets were also awaiting news from Russia-Ukraine peace talks between U.S. and Russian officials in Saudi Arabia later on Tuesday.
“There is seemingly plenty to be bearish about in the crude market, the biggest factor now being the outcome of Ukraine negotiations,” said Sparta Commodities analyst Neil Crosby.
“Russian oil may partially come back to the legitimate market, though there are, of course, many permutations to the end result.”
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