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NEW YORK: Oil prices settled slightly higher on Tuesday as signs of escalation of the Russia-Ukraine war turned investors cautious, but the partial restart of production in Norway's Johan Sverdrup oilfield limited gains. Brent crude futures rose by a cent to settle at US$73.31 per barrel.
US West Texas Intermediate crude futures rose 0.3%, or 23 cents, to close at US$69.39 a barrel.
For the first time, Ukraine used US ATACMS missiles to strike Russian territory on Tuesday, Moscow said. Russian foreign minister Sergei Lavrov described the attack as a Western escalation. Russian President Vladimir Putin lowered the threshold for a possible nuclear strike.
Investors are wary, said Toshitaka Tazawa, an analyst at Fujitomi Securities, "assessing the direction of the Russia-Ukraine war after the weekend's escalation". Also supporting oil prices, supply issues persisted in Kazakhstan's largest oilfield, Tengiz. Tengiz production has reduced by 28% to 30% due to repairs, which the country's energy ministry has said will be completed by Saturday.
Market watchers pointed to signs of higher crude oil purchases by top importer China. China's crude imports are on track to end November at or close to all-time highs, StoneX energy analyst Alex Hodes said, referencing data from vessel tracker Kpler. Weak imports by China so far this year have weighed heavily on oil prices, pulling Brent futures down 20% from their April peak of over US$92 a barrel.
China's crude oil imports in October fell from a year earlier for the sixth straight month. China likely stepped up oil purchases this month as current prices offer relatively good value, Hodes said. Limiting oil's ascent, Equinor resumed partial production from the Johan Sverdrup field in the North Sea, Western Europe's largest oilfield, the day after a power outage there contributed to a 3% surge in oil price benchmarks.
The partial restart and a stronger US dollar weighed on market sentiment on Tuesday, UBS analyst Giovanni Staunovo said. Oil prices also came under pressure after confidential reports by the UN nuclear watchdog, seen by Reuters, said Iran has offered to stop expanding its stock of uranium enriched to 60% purity, near the roughly 90% of weapons grade. Looking ahead, analysts expect the US government to report slightly higher crude oil and gasoline stockpiles for last week when it releases the data on Wednesday, according to an extended Reuters poll of nine analysts.
Higher stockpiles are typically an indicator of low demand. — Reuters.
