Oil rises 2% on supply disruptions in Russia, U.S.

The chimneys of the Total Grandpuits oil refinery are seen just after sunset, southeast of Paris, France, March 1, 2021. REUTERS/Christian Hartmann

HOUSTON  -Oil prices rose about 2 percent on Monday on concerns over global energy supplies following a Ukrainian drone strike on Russia’s Novatek fuel terminal and as extreme cold weather continued to hamper U.S. crude production.

Brent March crude futures settled at $80.06 a barrel, up $1.50, or 1.9 percent.

Front-month U.S. West Texas Intermediate crude futures contract (WTI) for February delivery closed at $75.19, up $1.78, or 2.4 percent, as the contract expired. The more active March WTI contract, was up $1.36 at $74.61.

“There are finally concerns in the market about genuine supply disruptions,” said John Kilduff, partner at Again Capital LLC, citing the drone strike that idled portions of the Novatek terminal.

Severe cold weather across the U.S. is limiting crude oil output in North Dakota, as well hampering production in other states, said Phil Flynn, analyst with Price Future Group.

READ: Oil tries to regain footing as Middle East crisis, OPEC supply in focus

Over 20 percent of output in the third largest oil producing state remained shut in on Monday after being halved last week by extreme cold weather and operational challenges, North Dakota’s pipeline authority said.

Flynn added that stock markets continue to gain, pointing to greater demand in the coming months.

“Pessimism about the economy is going away,” he said.

The benchmark S&P 500 scaled a fresh record high, extending a bull run into a new week on a boost from megacap and chip stocks.

READ: Wall Street smashes records ahead of heavy corporate earnings

No signs of respite

There are no signs of respite in Israel’s offensive in Gaza while attacks by Iran-aligned Houthis on commercial vessels in the Red Sea have continued despite retaliatory measures from the United States.

Still, oil fundamentals could continue to drag on prices, according to IG analyst Tony Sycamore.

Oil production is higher while the growth outlook in China and Europe is mixed and data this week is expected to show U.S. economic growth has slowed considerably, he said.

“Investors want to be bullish, but tepid data and a cautious narrative from policymakers keep them on the back foot,” said Tamas Varga of oil broker PVM.

READ: Oil prices rise on strong IEA and OPEC demand estimates

The latest demand growth forecasts by the U.S. Energy Information Administration, the International Energy Agency and the Organization of the Petroleum Exporting Countries for 2024 range between 1.24 million and 2.25 million barrels per day, though all three organizations expect demand growth to slow in 2025.

Separately, production at Libya’s Sharara oilfield resumed on Sunday, state oil company NOC said, after protesters ended a sit-in that had halted output since early January.