Oil Holds Gain With Russian Refining and OPEC+ Curbs to the Fore

(Bloomberg) -- Oil held a gain with the impact of Ukrainian drone attacks on Russian refineries and OPEC+ supply cuts in focus.

Brent crude steadied near $87 a barrel after posting the highest close since late October on Monday. West Texas Intermediate was below $83. About 600,000 barrels of Russia’s daily refining capacity has been knocked out by the strikes, according to Gunvor Group Ltd., while JP Morgan Chase and Co. put the figure at about 900,000 barrels.

Crude is on course for a third monthly climb after breaking free from a narrow range it had been trading in for much of the year. OPEC+ supply curbs have helped to bolster prices, and Iraq said this week it would cut oil exports in the coming months to compensate for not having delivered in full on its earlier pledges to reduce production.

Data on Monday showed China’s factory output and investment grew more strongly than expected at the start of the year, and the nation refined a record amount of crude. In the US, meanwhile, a still-robust economy has prompted Federal Reserve policymakers to be cautious about when they can start to cut rates.

“An upswing in economic activity and investor optimism in both the US and China has lifted the hope of healthy demand from the top two consumers of crude,” said Priyanka Sachdeva, senior market analyst at brokerage Phillip Nova Pte. Still, a “looming Fed policy decision, where the Fed is anticipated to hold rates, might boost demand-side worries,” she said.

Timespreads have risen in tandem with the latest gains in futures, with the gap between Brent’s two nearest contracts at 71 cents a barrel in backwardation. That’s a bullish pattern, with nearer contracts trading at a premium to later-dated ones. The figure was 49 cents a week ago. Volatility, however, continues to creep lower.

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