Oil continues to rise as investors bet on tight supply

by Florence Tan

SINGAPORE (Reuters) – Oil prices fell slightly on Monday, maintaining recent gains amid expectations of OPEC+ supply cuts, strikes on Russian refineries and upbeat Chinese manufacturing data.

Brent crude fell 17 cents, or 0.2%, to $86.83 a barrel by 0017 GMT, after rising 2.4% last week. U.S. West Texas Intermediate crude was down 11 cents, or 0.1%, at $83.06 a barrel, after gaining 3.2% last week.

Trading volumes are expected to be low on Monday as many countries are closed due to Easter holidays.

Both benchmarks remained higher for the third straight month, with Brent above $85 a barrel since mid-March as the Organization of the Petroleum Exporting Countries and their allies, a group known as OPEC+, extended production cuts through June. Had promised to extend till the end. Due to which the supply of crude oil may decrease during summer in the Northern Hemisphere.

Russian Deputy Prime Minister Alexander Novak said on Friday its oil companies would focus on reducing output rather than exports in the second quarter to spread output cuts more evenly with other OPEC+ member countries.

Drone attacks destroyed several Russian refineries, which is expected to reduce Russia’s fuel exports.

“Geopolitical risks to crude oil and heavy feedstock supplies add to strong Q2 24 demand fundamentals,” Energy Aspects analysts said in a note.

The consultancy said about 1 million barrels per day of Russian crude processing capacity was offline amid the attacks, hitting exports of its high-sulfur fuel oil, which is processed at Chinese and Indian refineries.

In Europe, oil demand was stronger than expected, rising by 100,000 bpd year-on-year in February, while a 200,000 bpd contraction in 2024 was forecast, Goldman Sachs analysts said.

Europe’s strong demand, softening…

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