Oil rises as investors assess attacks on Russian energy facilities

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By Georgina McCartney

HOUSTON (Reuters) – Oil prices rose on Monday as investors assessed the impact of Ukrainian drone attacks on Russian refineries and of U.S. President Donald Trump pressing NATO nations to halt Russian oil purchases.

Brent crude futures rose 42 cents, or 0.63%, to $67.41 a barrel by 1:13 p.m. EDT while U.S. West Texas Intermediate crude was at $63.27 a barrel, up 58 cents or 0.93%.

Attacks on Russian oil infrastructure and mounting pressure from Trump on buyers of Russian crude were boosting oil prices on Monday, said Phil Flynn, senior analyst with Price Futures Group.

“Behind the scenes there are a lot of concerns around heavy oil and tight diesel supplies, keeping the market supported,” Flynn added.

Ukraine launched a large attack with at least 361 drones targeting Russia overnight, sparking a brief fire at the vast Kirishi oil refinery in Russia’s northwest, Russian officials said on Sunday.

Both crude contracts gained more than 1% last week as Ukraine stepped up attacks on Russian oil infrastructure, including the largest oil exporting terminal, Primorsk.

Primorsk has a capacity to load about 1 million barrels per day of crude, while the Kirishi refinery processes about 355,000 bpd of Russian crude, equal to 6.4% of the country’s total.

Trump said on Saturday that the U.S. was prepared to impose fresh energy sanctions on Russia, but only if all NATO nations ceased purchasing Russian oil and implemented similar measures.

Oil also received some support from solid refinery demand in China last month and a decline in U.S. crude inventories, while weaker economic data from China weighed on prices, UBS analyst Giovanni Staunovo said.

Investors are awaiting the interest rate decision by the U.S. Federal Reserve at its September 16-17 meeting, at which the bank is expected to ease monetary policy. Lower borrowing costs could boost fuel demand.

“The market is starting to price in maybe a more aggressive Fed cut, putting some downward pressure on the U.S. dollar and giving oil a boost,” said Price Futures Group’s Flynn.

The U.S. dollar dropped against its peers on Monday, which could encourage crude demand as a weaker dollar makes oil less expensive for holders of other currencies.

Last week, softer job-creation data and rising inflation in the U.S. raised concerns about economic growth in the world’s largest economy and oil consumer.

(Reporting by Georgina McCartney, Enes Tunagur, Florence Tan; Editing by Emelia Sithole-Matarise, Chizu Nomiyama, Nia Williams and Edmund Klamann)