LONDON: Oil prices added to recent gains on Monday amid expectations of tighter supply from OPEC+ cuts and attacks on Russian refineries while upbeat Chinese manufacturing data supported the outlook for improving demand.
Brent crude was 25 cents, or 0.3%, higher at $87.25 a barrel by 0830 GMT after rising 2.4% last week.
US West Texas Intermediate crude was at $83.44 a barrel, up 27 cents, or 0.3%, following a 3.2% gain last week.
Trading volumes were thin as markets in several countries remained closed for the Easter holidays. Both benchmarks posted a third consecutive month of gains in March, with Brent holding above $85 a barrel since the middle of last month.
The Organization of the Petroleum Exporting Countries (OPEC) and its allies, a group known as OPEC+, has pledged to extend production cuts to the end of June which could tighten crude supply during summer in the Northern Hemisphere.
Russian Deputy Prime Minister Alexander Novak said on Friday that the country’s oil companies will focus on reducing output rather than exports in the second quarter in order to evenly spread production cuts with other OPEC+ members.
Oil prices up on tighter supply outlook
Drone attacks from Ukraine have knocked out several Russian refineries, which is expected to reduce Russia’s fuel exports.
“Geopolitical risks to crude and heavy feedstock supplies add to strong (second-quarter) demand fundamentals,” Energy Aspects analysts said in a note.
Almost 1 million barrels per day (bpd) of Russian crude processing capacity is offline from the attacks, impacting its high-sulphur fuel oil exports which are processed at Chinese and Indian refineries, the consultancy added.
In Europe, oil demand was firmer than expected, rising 100,000 bpd on the year in February, Goldman Sachs analysts said, versus its forecast of a 200,000 bpd contraction in 2024.
Firm European demand and softness in US supply growth coupled with a possible extension of OPEC+ cuts through 2024 outweigh downside risk from persistent softness in China’s demand, they said in a note.
Still, China’s manufacturing activity expanded for the first time in six months in March, an official factory survey showed on Sunday, supporting oil demand in the world’s largest crude importer, even as a crisis in the property sector continues to drag on the economy.
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