Oil prices traded in a tight range on Monday as worries about rising output and the impact of U.S. tariffs on demand offset supply disruptions stemming from intensified Russia-Ukraine airstrikes.
Brent crude fell 30 cents, or 0.44%, to $67.18 a barrel by 0500 GMT, while U.S. West Texas Intermediate crude was at $63.73 a barrel, down 28 cents, or 0.44%. Trading is expected to be muted due to a U.S. bank holiday.
Ukrainian President Volodymyr Zelenskiy vowed on Sunday to retaliate by ordering more strikes deep inside Russia after Russian drone attacks on power facilities in northern and southern Ukraine. Both countries have intensified airstrikes in recent weeks, targeting energy infrastructure and disrupting Russian oil exports.
Markets remained concerned about Russian oil flows, with weekly shipments from its ports dropping to a four-week low of 2.72 million barrels per day, according to tanker tracker data cited by ANZ analysts in a note.
However, Russian oil exports to India are set to rise in September, traders said, despite secondary tariffs imposed on New Delhi by the U.S. for buying oil from Moscow.
“Modi’s meeting with Putin in China will be closely watched, particularly in light of U.S. pressures,” Michael McCarthy, CEO of Moomoo Australia, said, referring to the Indian and Russian presidents who are attending the Shanghai Cooperation Organisation regional security bloc in China.
A Reuters poll on Friday showed that oil prices are unlikely to gain much traction from current levels this year, as rising output from top producers adds to the risk of a surplus and U.S. tariff threats weigh on demand growth.
The week started with a slew of manufacturing and export data from China, Japan and South Korea, among the world’s biggest crude oil importers.
Factory activity in China unexpectedly grew in August but weakened for other Asian economies as companies began to feel the pain from U.S. tariffs, private surveys showed on Monday, clouding the outlook for the region’s fragile recovery.
Brent and WTI crude posted their first decline in four months in August, down 6% or more on OPEC+ supply concerns.
Investors are eyeing the September 7 meeting between members of the Organization of the Petroleum Exporting Countries and their allies for further supply cues.
Meanwhile, U.S. crude oil production hit a record high in June, rising 133,000 barrels per day to 13.58 million bpd, according to data released by the Energy Information Administration on Friday.
A U.S. labor market report this week will give a crucial read into the economy’s health and test investors’ confidence that interest rate cuts are coming soon, a view that has lifted their appetite for riskier assets such as commodities.
