Oil prices rose to multi-month highs for the second straight session on Tuesday as traders assessed how Ukraine’s recent attacks on Russian refineries would affect global petroleum supplies.
U.S. West Texas Intermediate crude futures gained 75 cents, or 0.9%, to settle at $83.47 a barrel, the highest since Oct. 27. Global benchmark Brent crude settled 0.6% higher at $87.38 a barrel, the highest since Oct. 31.
Ukraine has stepped up attacks on Russian oil infrastructure this year, with at least seven refineries targeted by drones just this month. The attacks have shut down 7%, or around 370,500 barrels per day, of Russian refining capacity, Reuters calculations show.
While lower refining activity has led to an increase in Russian crude oil exports, it could also lead to crude oil production cuts as the country faces storage constraints, StoneX energy analyst Alex Hodes said.
Based on Hodes’ calculations, the attacks on Russian refineries could result in a decrease of around 350,000 bpd of global petroleum supplies and boost U.S. crude prices by $3 per barrel.
Even if the attacks do not lead to a direct loss of Russian crude supply, there is still a spillover effect for oil prices from surging refined product margins, SEB Research analyst Bjarne Schieldrop wrote on Monday.
Oil gained support from declining crude exports from Saudi Arabia and Iraq, as well as signs of stronger demand and economic growth in China and the U.S.
U.S. single-family homebuilding rebounded sharply in February, the Commerce Department reported. Homebuilding could boost economic growth, supporting oil demand.
“Oil demand data surprising on the positive side and the extension of the voluntary OPEC+ cuts until the end of June have supported prices,” UBS analyst Giovanni Staunovo said.
“Brent will likely trade in an $80-90 per barrel range this year, with an end-June forecast of $86 per barrel,” Staunovo added.
U.S. crude oil stocks fell by 1.5 million barrels in the week ended March 15, market sources said citing American Petroleum Institute figures. A Reuters poll of analysts expected stocks to rise by about 10,000 barrels last week.
Official stockpile data from the U.S. Energy Information Administration is due at 10:30 a.m. ET (1430 GMT) on Wednesday.