Brent crude oil appreciated by 63 cents or 1 per cent to $68.15 per barrel on Monday as concerns mounted that airstrikes in Russia and Ukraine could lead to supply disruptions.
Also, a weaker Dollar provided additional support to prices yesterday, helping the West Texas Intermediate (WTI) crude futures up by 67 cents or 1.1 per cent to $64.68 a barrel, through trade was muted due to Labour Day holiday.
Ukrainian President Volodymyr Zelenskiy on Sunday vowed to retaliate against Russian drone strikes on power facilities in his country’s north and south, and ordered more strikes deep inside the neighbouring nation.
Both Russia and Ukraine have intensified airstrikes in recent weeks, even as efforts are underway to resolve the crisis which started in February 2022. The intensified fighting in recent weeks comes as US President Donald Trump leads a push to end the war.
Concerns about Russian oil flows with weekly shipments from its ports dropping to a four-week low of 2.72 million barrels per day.
Investor confidence that interest rate cuts are coming soon have also supported riskier assets such as commodities.
The US Dollar was close to a five-week low on Monday, making oil less expensive for buyers using other currencies.
Investors were also focused on China where President Xi Jinping, Russian counterpart Vladimir Putin and Indian Prime Minister Narendra Modi are attending a regional summit.
China’s manufacturing activity expanded at the quickest pace in August in five months, a private-sector survey from the RatingDog China General Manufacturing PMI, compiled by S&P Global, rose to 50.5 in August from 49.5 in July. The 50-mark separates growth from contraction. That helped lend support to oil and copper prices.
The market is also focused on a meeting of the Organisation of the Petroleum Exporting Countries and its allies (OPEC+) on September 7.
Market analysts noted that the next key fundamental question is whether OPEC+ oil producers will continue to raise the group’s output targets beyond September.
Higher OPEC+ supply and rising stockpiles could keep pressure on oil prices after both Brent and WTI registered their first monthly declines in four months in August, losing 6 per cent or more.