Oil holds in tight range, rising output offsets Russia supply disruptions

Oil prices traded in a tight range on Monday as worries about rising output and the impact of US tariffs on demand offset supply disruptions stemming from intensified Russia-Ukraine airstrikes.

Brent crude fell 12 cents, or 0.18 per cent, to US$67.36 a barrel by 0046 GMT, while US West Texas Intermediate crude was at US$63.88 a barrel, down 13 cents, or 0.2 per cent. Trading is expected to be muted due to a US 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.

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 US tariff threats weigh on demand growth.

The week started with China’s manufacturing activity shrinking for a fifth straight month in August, an official survey showed on Sunday, suggesting producers are holding back amid uncertainty over a trade deal with the US and sluggish domestic demand.

Investors are eyeing the Sep 7 meeting between members of the Organization of the Petroleum Exporting Countries and their allies for further cues on rising output from Opec+.

Meanwhile, US 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 US labour 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. REUTERS