[HOUSTON] Oil prices settled higher 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 settled up 45 cents, or 0.67 per cent, at US$67.44 a barrel while US West Texas Intermediate crude settled 61 cents higher, up 0.97 per cent, at US$63.30 a barrel.
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.
One of Russia’s largest oil refineries, in the northwestern town of Kirishi, has halted a key processing unit following a Ukrainian drone attack over the weekend, two industry sources said on Monday.
Both crude contracts gained more than 1 per cent last week as Ukraine stepped up attacks on Russian oil infrastructure, including the largest oil exporting terminal, Primorsk.
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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 per cent 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.
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Investors are awaiting the interest rate decision by the US Federal Reserve at its Sep 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.
The US dollar dropped against its peers on Monday, which could encourage crude demand as a weaker dollar makes oil less expensive for holders of other currencies.
Last week, softer job-creation data and rising inflation in the US raised concerns about economic growth in the world’s largest economy and oil consumer. REUTERS
