(New York) Oil prices continued to rise on Tuesday, driven by fears of supply disruptions after strikes on Russian refineries.
The price of a barrel of Brent from the North Sea, for delivery in May, gained 0.56% to $87.38.
Its American equivalent, a barrel of West Texas Intermediate (WTI), for delivery in April, rose 0.90% to $83.47.
Crude prices are rising “due to supply concerns,” IG analysts commented.
“Intensified Ukrainian attacks on Russian refining facilities, as well as an upward revision to the outlook for global demand growth this year, have contributed to pushing up prices,” says Trade Nation analyst David Morrison.
A drone attack, blamed on Ukraine, caused the fire at the Slavyansk-on-Kuban refinery in southern Russia, in the Krasnodar region, regional authorities said on Sunday.
On Saturday, a refinery was set on fire in Samara, some 1,000 km from the Ukrainian border, after drone attacks.
“Approximately 600,000 barrels per day of production capacity were knocked out of service following these attacks,” said Thu Lan Nguyen, an analyst at Commerzbank.
“This will make a difference in the market,” added Robert Yawger of Mizuho USA, adding that Russian crude production could also be affected by this infrastructure damage, because Russia lacks crude storage capacity.
Investors are also watching the monetary policy decision of the American Federal Reserve (Fed) on Wednesday.
The market expects that the Fed will once again leave its rates unchanged, and that a first, highly anticipated cut will be decided in June.
Lower interest rates are favorable for oil purchases. This would “encourage economic activity, create additional demand due to the weakening dollar and, at the same time, reduce the cost of transactions,” says Tamas Varga, an analyst at PVM Energy.
Conversely, a high interest rate environment tends to weigh on growth, and therefore on demand for crude oil.