Oil gains more ground on Russian cuts

Beijing — Oil prices were on track to gain for a second consecutive day on Tuesday after settling up more than a dollar on expectations of tighter supply driven by Russian production cuts and attacks on Russian refineries.

Brent crude rose 23c to $86.98 a barrel by 1.18am GMT. US crude futures climbed 28c to $82.23.

Crude oil gained on supply side issues and continued Middle East tensions, according to a note from ANZ analysts.

Both contracts settled $1.32 higher in the previous trading session.

Russia told its oil companies to reduce output to meet an Opec target of 9-million barrels a day (bbl/day). In late February, Russia had been producing about 9.5-million barrels a day.

At the same time, Ukranian attacks on Russian oil refineries have continued. Russia’s Kuibyshev refinery had to shut half its capacity after a fire broke out there on Saturday morning.

In a sign of further supply tightening, Macquarie forecast that US refinery crude runs would increase by 300,000bbl/day next week against a decrease in domestic supply of 500,000bbl/day, according to a note from energy strategist Walt Chancellor.

On Monday, the UN security council passed a resolution calling for a ceasefire between Israel and Palestinian militants Hamas, after the US abstained from the vote.

But analysts are not confident that a ceasefire would halt the Houthi attacks that have roiled shipping routes in the Red Sea.

After the vote, Israeli Prime Minister Benjamin Netanyahu cancelled a visit to the US to discuss Israel’s planned invasion of the Gaza city of Rafah, which Israel’s allies have opposed. Though the US said its position had not changed, the spat raised questions about whether the US would restrict military aid to Israel if it presses ahead with the invasion.

Reuters