In Asian trade on Monday, oil prices rose, extending gains from last week of over 4% on tightened supplies and increased attacks on Russian energy infrastructure.
Brent futures for May rose 47 cents, or 0.5%, to $85.81 a barrel by 0720 GMT. The April WTI crude contract rose 49 cents, or 0.6%, to $81.53. The active May WTI delivery contract rose 50 cents, or 0.6%, to $81.08 per barrel.
"The strikes on Russian refineries added $2-$3 per barrel of risk premium to crude last week, which continues this week with more attacks over the weekend," said Vandana Hari, founder of Vanda Insights.
Hari added that crude will wait for new signs before making a major move. One strike on Saturday briefly ignited the Slavyansk refinery in Kasnodar, which processes 8.5 million metric tons of crude oil annually, or 170,000 barrels per day.
Reuters estimated that the attacks idled 7% of Russian refining capacity in the first quarter. The refineries export crude to China and India.
Israeli Prime Minister Benjamin Netanyahu announced on Sunday that he will enter Gaza's Rafah pocket, where over 1 million displaced people are sheltering, despite criticism from Israel's allies. This would make regional peace "very difficult" according to German Chancellor Olaf Scholz.
Investors are watching the U.S. Federal Reserve's two-day meeting that ends Wednesday this week. That will clarify interest rate decrease timing, IG market analyst Tony Sycamore stated. The Fed would likely hold rates steady this month, but a June rate decrease "is now a coin flip," Sycamore added.Lower interest rates in the U.S., the world's largest oil consumer, would boost oil prices.
The agency, which represents industrialized nations, raised its demand prediction for the fourth time since November after Houthi strikes in the Red Sea diverted crude and fuel vessels, decreasing consumer access to oil. IEA expected a minor supply deficit this year for the first time. As refineries finished projects, U.S. petroleum demand sustained prices. Brent and WTI futures rose 11% and 13% in 2024 as of Friday's close.
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