Oil prices rise on supply fears amid tensions in Eastern Europe and the Middle East
TOKYO: Oil prices rose on Monday on concerns over supply disruptions amid growing tensions in Eastern Europe and the Middle East, which could make an already tight market even tighter, while OPEC and its allies continued to struggle to increase production.
Brent crude futures rose 81 cents, or 0.9%, to hit $88.70 a barrel at 0344 GMT, reversing a 0.6% loss on Friday.
U.S. West Texas Intermediate (WTI) crude futures gained 72 cents, or 0.9%, to US$85.86 a barrel, after falling 0.5% on Friday.
Both benchmarks rose for a fifth consecutive week last week, gaining around 2% to their highest level since October 2014. Prices have already risen more than 10% this year on concerns over the tightening of the offer.
“Investors remained bullish on geopolitical risk between Russia and Ukraine as well as in the Middle East, while OPEC+ continued to miss its production target,” said analyst Kazuhiko Saito. Chief at Fujitomi Securities Co Ltd.
“An expectation of higher U.S. demand for fuel oil in cold weather also added to the pressure,” he said.
Fueling fears of a supply disruption in Eastern Europe, the United States ordered the departure of family members of its embassy staff in Ukraine on Sunday, citing the continued threat of military action by the United States. from Russia.
The New York Times reported late Sunday that US President Joe Biden is considering deploying several thousand US troops to NATO allies in Eastern Europe and the Baltics.
Russia will face severe economic sanctions if it installs a puppet regime in Ukraine, a senior British government minister said on Sunday, after Britain accused the Kremlin of seeking to place a pro-Russian leader there. .
In the Middle East, the United Arab Emirates’ Defense Ministry said it destroyed two Houthi ballistic missiles targeting the Gulf country on Monday, with no casualties, the state news agency (WAM) reported.
OPEC+, which groups the Organization of the Petroleum Exporting Countries (OPEC) with Russia and other producers, is struggling to meet its target of increasing monthly production by 400,000 barrels per day (bpd).
OPEC+ compliance with long-settled oil production cuts rose to around 122% in December, two sources from the producer group told Reuters, indicating some members continue to struggle to increase output.
“Expectations that OPEC+ members such as Saudi Arabia and Russia will maintain the current policy of ramping up production to keep Brent oil prices between $85 and $90 a barrel are bolstering sentiment said Tetsu Emori, CEO. of Emori Fund Management Inc.
Fund managers raised their net long positions in U.S. crude futures and options in the week to Jan. 18, the Commodity Futures Trading Commission (CFTC) said on Friday.
In the United States, oil inventories have continued to fall over the past month as energy companies shut down oil rigs this week for the first time in 13 weeks. Analysts expect cold weather to boost heating demand over the next few weeks.[RIG/U]
(Reporting by Yuka Obayashi; Editing by Kenneth Maxwell and Himani Sarkar)