Oil little changed as markets weigh Russian supply woes
LONDON — Oil was little changed on Tuesday after rising in the previous session as investors took a more mixed view toward the loss of Russian refinery capacity after recent Ukrainian attacks while a slightly weaker U.S. dollar offered some support.
Front-month Brent crude futures due to expire on Thursday were up 11 cents to $86.86 a barrel at 1200 GMT, while U.S. West Texas Intermediate (WTI) crude futures edged up 19 cents to $82.14.
More actively traded Brent futures for June were up 13 cents to $86.21.
Brent rose 1.5 per cent in Monday’s session while WTI gained 1.6 per cent higher after Russia’s government ordered companies to cut output in the second quarter to meet a 9 million barrels per day (bpd)target to comply with pledges to the OPEC+ consumer group.
Russia, a top three global oil producer and one of the largest exporters of oil products, is also contending with recent attacks on its oil refineries by Ukraine. Goldman Sachs analysts estimate the attacks have knocked about 900,000 bpd of capacity offline, possibly for weeks and in some cases permanently.
“The impact of refining disruptions on crude prices is mixed, with a bearish effect from the decline in refinery demand and a bullish effect from the potential reduction in Russia oil exports,” the analysts said in a note.
After a Ukrainian drone attack on Saturday,
Russian oil producer Rosneft shut a 70,000 bpd crude unit at its Kuibyshev refinery in the city of Samara.
While the consequences of the attacks and Russian cuts seemed unclear, a slightly weaker U.S. dollar from the previous session somewhat supported prices.
A weaker dollar typically makes it cheaper for oil purchases in other currencies which could bolster overall demand.
“The USD may continue to face downside pressure as the Fed is expected to cut rates later this year, which potentially offers the bullish factor to oil prices,” said independent market analyst Tina Teng.
Rising geopolitical premiums as the IsraelGaza conflict continues were also supportive of prices, though an immediate impact on supplies in the Middle East region remains to be seen.