SlavkoSereda/iStock via Getty Images
Crude oil futures closed modestly higher Monday, as the market paid little heed to the potential impact of U.S. retaliatory strikes against Iran-backed militants in Syria and Iraq and further attacks against Houthi rebel targets in Yemen over the weekend.
Various analysts said the markets remain unconvinced that conflict in the Middle East will expand in a way that threatens crude supplies, while traders also watch Chinese economic data with concern over the outlook for global crude demand.
Dollar strength following last week’s hawkish Fed comments and strong U.S. payrolls data also is keeping a lid on oil price gains.
WTI crude plunged 7.3% and Brent lost 6.8% last week, with both grades finishing at three-week lows on Friday, attributed in part to news reports indicating progress toward a ceasefire deal between Israel and Hamas.
Front-month Nymex crude for March delivery (CL1:COM) closed +0.7% to $72.78/bbl, and front-month April Brent crude (CO1:COM) finished +0.8% to $77.99/bbl, with both snapping three-session losing streaks.
ETFs: (NYSEARCA:USO), (BNO), (UCO), (SCO), (USL), (DBO), (DRIP), (GUSH), (NRGU), (USOI)
Ukrainian drones struck a major Russian oil refinery on Saturday, the latest in a series of long-range attacks on Russian oil facilities that have reduced the country’s exports of the petrochemical feedstock naphtha.
Much of the refining capacity at the plant in Volgograd, one of Russia’s biggest refineries and a supplier of fuel both to domestic and foreign markets, likely will be offline.
Analysts say the attacks on Russian energy infrastructure pose a potentially bigger risk to fuel supplies than Red Sea shipping disruption, which add to shipping costs and cause delays, but do not suddenly change how much oil is on the market.
But the drone strikes on fuel production plants risk destroying supply and thus tightening global balances and potentially lifting prices.