Oil prices rise on tighter supply, geopolitical risks
investing.comBy Colleen Howe
BEIJING (Reuters) — Oil prices ticked up in early Asian trading on Monday, firming up gains from last week when prices rose nearly 4% on the view that supply was tightening.
Brent crude oil futures for May delivery inched up 3 cents to $85.37 a barrel by 0045 GMT. The April contract for U.S. West Texas Intermediate (WTI) crude was up 10 cents to $81.14.
«Geopolitical risks also remain elevated,» analysts from ANZ wrote in a note, pointing to a stepped-up campaign of Ukranian drone strikes on Russian oil refineries over the last week.
On Saturday, one of the strikes sparked a brief fire at the Slavyansk refinery in Kasnodar, which processes 8.5 million metric tons of crude oil a year, or 170,000 barrels per day.
A Reuters analysis found the attacks have idled around 7% of Russian refining capacity in the first quarter.
In the Middle East, Israeli Prime Minister Benjamin Netanyahu confirmed on Sunday he will proceed with plans to push into Gaza's Rafah enclave where more than 1 million displaced people are sheltering, defying pressure from Israel's allies. German Chancellor Olaf Scholz said the step would make regional peace «very difficult.»
This week, investors are eyeing the outcome of the U.S. Federal Reserve's two-day meeting to be disclosed on Wednesday. That will bring more clarity on the timing of interest rate cuts, Tony Sycamore, a market analyst with IG, wrote in a note.
The Fed will likely keep rates unchanged this month, while the possibility of interest rate cuts at the June meeting «is now a coin flip,» Sycamore said.
Lower interest rates would stimulate demand in the U.S., supporting oil prices.
Both benchmark oil contracts finished last week nearly 4% higher despite a dip on Friday. Oil
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