Oil prices on Monday; Expectations that supply will be cut due to OPEC+ cuts rose as attacks on Russian refineries and Chinese manufacturing data supported the outlook for an improvement in demand.
Brent crude rose 24 cents, or 0.3%, to $87.24 a barrel at 06:49 GMT, after rising 2.4% last week. WTI crude rose 28 cents, or 0.3%, to $83.45 a barrel, following a 3.2% gain last week.
Trade volume is expected to be weak on Monday as many countries are closed for the Easter holidays.
Both indicators finished March higher for the third month in a row, as OPEC+ allies pledged to extend it. Brent has held above $85 per barrel since the middle of last month. Suspending production cuts until the end of June could tighten crude oil supplies in the Northern Hemisphere during the summer months.
Drone attacks from Ukraine have disabled many Russian refineries and this is expected to reduce Russia’s fuel exports.
Russian Deputy Prime Minister Alexander Novak said on Friday that oil companies will focus on reducing production rather than exports in the second quarter to spread production cuts evenly with other OPEC+ member countries.
Geopolitical risks to crude oil and heavy feedstock supply contribute to strong demand fundamentals in Q24.
About 1 million barrels per day (bpd) of Russian crude oil processing capacity was taken offline due to the attacks, which will affect exports of high-sulfur fuel processed in refineries in China and India.
Oil demand in Europe was stronger than expected, with an annual increase of 100,000 barrels in February, while a contraction of 200,000 barrels per day is forecast in 2024.
Strong European demand, balanced supply growth in the US, and the possibility of OPEC+ cuts being extended into 2024 outweigh the downside risk from persistent softness in Chinese demand.
Crude oil production in the United States, the world’s largest producer, fell 6% in January from its record peak in December following freezing weather, according to data released by the Energy Information Administration (EIA) on Friday.
Analysts foresee some risks to Brent’s forecast to average moderately upwards of $83/barrel in the fourth quarter of 2024.
China’s manufacturing activity also supported prices, which expanded for the first time in six months in March, supporting oil demand in the world’s biggest crude importer despite a real estate crisis, an official factory survey showed on Sunday.
Investors are also watching U.S. economic data for signs of when the Fed will cut interest rates this year, which will support the global economy and oil demand.
