Oil prices edged up on Wednesday amid worries of oil supply disruptions in the U.S. and Russia, and as markets awaited clarity on the Ukraine peace talks.
Brent crude futures were up 14 cents, or 0.2%, at $75.98 a barrel at 0450 GMT, and possibly set for a third day of gains.
U.S. West Texas Intermediate crude futures for March rose 16 cents, or 0.2%, to $72.01, up 1.8% from the close on Friday after not settling on Monday because of the Presidents’ Day public holiday. The March contract expires on Thursday and the more active April contract gained 14 cents, or 0.2%, to $71.97.
“The psychologically important $70 level appears to have held firm, aided by the Ukrainian drone attack on the Russian oil pumping station and fears that cold weather in the U.S. may curtail supply,” said IG market analyst Tony Sycamore.
“On top of that there is some speculation that OPEC+ may decide to delay its planned supply increase in April,” he said, referring to the Organization of the Petroleum Exporting Countries and allies.
Russia said oil flows through the Caspian Pipeline Consortium (CPC), a major route for crude exports from Kazakhstan, were reduced by 30%-40% on Tuesday after a Ukrainian drone attack on a pumping station. A 30% cut would equate to the loss of 380,000 barrels per day of supply to the market, according to Reuters calculations.
Meanwhile, cold weather threatened U.S. oil supply, with the North Dakota Pipeline Authority estimating that production in the country’s No. 3 producing state would be down by as much as 150,000 bpd.
U.S. President Donald Trump’s administration said on Tuesday it had agreed to hold more talks with Russia on ending the war in Ukraine. A deal could ease or help remove sanctions that have disrupted the flows of Russian oil shipments.
Analysts at Goldman Sachs said a potential Ukraine-Russia peace deal and associated easing in sanctions on Russia is unlikely to significantly raise Russia oil flows.
“We believe that Russia crude oil production is constrained by its OPEC+ 9 million barrels per day production target rather than current sanctions, which are affecting the destination but not the volume of oil exports,” they said in a report.
Israel and Hamas will also begin indirect negotiations on a second stage of the Gaza ceasefire deal, officials said on Tuesday.
However, Trump said on Tuesday he intends to impose auto tariffs “in the neighbourhood of 25%” and similar duties on semiconductors and pharmaceutical imports. Tariffs could raise prices for consumer products, weaken the economy and reduce demand for fuel.
(Reporting by Arathy Somasekhar in Houston and Emily Chow in Singapore; Editing by Christian Schmollinger and Kim Coghill)