Oil prices rose in Asian trade on Monday, rising nearly 1% in early trade, supported by lower exports from Russia and as attacks by the Houthis on ships in the Red Sea raised concerns of oil supply disruption.
Brent crude futures climbed 32 cents, or 0.4%, to $76.87 a barrel by 0413 GMT, while U.S. West Texas Intermediate crude was at $71.77 a barrel, up 34 cents, or 0.5%.
“The bad weather in Russia has played a part in the stronger open this morning as has the Houthis attack on ships close to Yemen,” IG analyst Tony Sycamore said.
Russia said on Sunday it would deepen oil export cuts in December by potentially 50,000 barrels per day or more, earlier than promised, as the world’s biggest exporters try to support global oil prices.
This comes after Moscow suspended about two-thirds of loadings of its main export grade Urals crude from ports due to a storm and scheduled maintenance on Friday.
Shipping firms, including the world’s biggest container shipping lines MSC and A.P. Moller-Maersk, said over weekend that they would avoid the Suez Canal as Houthi militants in Yemen stepped up their assaults on commercial vessels in the Red Sea.
Bab al-Mandab is one of the world’s most important routes for global seaborne commodity shipments, particularly crude oil and fuel from the Gulf bound westward for the Mediterranean via the Suez Canal or the nearby SUMED pipeline, as well as commodities heading eastward for Asia, including Russian oil.
Both Brent and WTI ended their longest streak of weekly declines in half a decade with a small gain last week after a U.S. Federal Reserve meeting last week raised hopes that interest rate hikes are over and cuts are on their way.
“I think just as importantly however is last week’s dovish Fed meeting which removes the tail risks of a hard landing for the U.S. economy and for crude oil demand going forward,” IG’s Sycamore added.
“Not to mention the technical picture in crude oil supports a recovery into the $76/78 area,” he added, referring to WTI prices.
Crude oil was also supported by a weakened dollar and larger-than-expected U.S. inventory data, said CMC Markets analyst Tina Teng in a note, as a weaker dollar makes dollar-denominated oil cheaper for foreign buyers.
Analysts said that oil inventories at Cushing, Oklahoma, the top U.S. storage hub, rebounded last month after nearing operational lows due to improved pricing at the hub that pulled in barrels from Texas’ Permian basin and higher Canadian crude flows.
The recent influx of crude from both the locations has pushed Cushing inventories higher for eight straight weeks, reaching 30.8 million barrels.
(Reporting by Florence Tan and Emily Chow; Editing by Christopher Cushing)