HOUSTON: Oil prices rose on Monday as investors assessed the impact of Ukrainian drone attacks on Russian refineries and of US President Donald Trump pressing NATO nations to halt Russian oil purchases. Brent crude futures rose 42 cents, or 0.63 percent, to USD67.41 a barrel by 1:13 p.m. EDT while US West Texas Intermediate crude was at USD63.27 a barrel, up 58 cents or 0.93 percent.
Attacks on Russian oil infrastructure and mounting pressure from Trump on buyers of Russian crude were boosting oil prices on Monday, said Phil Flynn, senior analyst with Price Futures Group. “Behind the scenes there are a lot of concerns around heavy oil and tight diesel supplies, keeping the market supported,” Flynn added.
Ukraine launched a large attack with at least 361 drones targeting Russia overnight, sparking a brief fire at the vast Kirishi oil refinery in Russia’s northwest, Russian officials said on Sunday. Both crude contracts gained more than 1percent last week as Ukraine stepped up attacks on Russian oil infrastructure, including the largest oil exporting terminal, Primorsk.
Primorsk has a capacity to load about 1 million barrels per day of crude, while the Kirishi refinery processes about 355,000 bpd of Russian crude, equal to 6.4 percent of the country’s total.
Trump said on Saturday that the US was prepared to impose fresh energy sanctions on Russia, but only if all NATO nations ceased purchasing Russian oil and implemented similar measures. Oil also received some support from solid refinery demand in China last month and a decline in US crude inventories, while weaker economic data from China weighed on prices, UBS analyst Giovanni Staunovo said. Investors are awaiting the interest rate decision by the US Federal Reserve at its September 16-17 meeting, at which the bank is expected to ease monetary policy. Lower borrowing costs could boost fuel demand.
“The market is starting to price in maybe a more aggressive Fed cut, putting some downward pressure on the US dollar and giving oil a boost,” said Price Futures Group’s Flynn.