Oil prices hitch ride on fresh supply concerns to settle higher
Investing.com — Oil prices settled higher Monday, starting the week on the front foot after Ukraine reportedly attack a key export terminal in Russia, adding fresh concerns about supply disruptions at time when Middle East tension remain front and center.
By 14:30 ET (19.30 GMT), the U.S. crude futures settled 2.4% to $75.19 a barrel and the Brent contract settled 1.9% at $80.06 a barrel.
Fresh supply disruptions provide support
Ukraine allegedly carried out a drone attack on a major Russian fuel export terminal over the weekend. Russian energy company Novatek said it had been forced to suspend some operations at the site due to a fire, Reuters reported.
The suspension of operations at Russian export terminal added to ongoing concerns about supply disruptions as conflict in the oil-rich Middle East – amid the ongoing war between Israel and Hamas — has widened.
The Yemen-based Houthi militants continue to threaten shopping into the Gulf of Aden, a crucial artery for shipping between Europe and Asia, while Iran and Pakistan are now in violent conflict.
Weather conditions weigh on US output
The cold snap that swept through some regions of the U.S. has hampered oil domestic oil production, with North Dakota oil output estimated to decline by 250,000 to 300,000 barrels per day.
North Dakota, which produced about average of 1 million barrels of oil per day in 2022, is the third largest crude-producer in the U.S.
Still, the oil demand outlook remains in questions amid ongoing concerns about slowing global growth keeping a lid on oil consumption.
Demand concerns remain prominent
However, gains have been limited by concerns over a near-term slowdown in demand, with signs of a sluggish economic recovery in China being a major point of contention. The world’s largest oil importer saw underwhelming growth in the fourth quarter.
European growth is also difficult to find, while severe cold weather across the U.S. caused more disruptions and also limited travel in large parts of the country, pointing to weaker demand in the world’s largest fuel consumer. This notion was also exacerbated by a string of weekly builds in U.S. oil product inventories.
(Peter Nurse, Ambar Warrick contributed to this article.)
