Oil prices saw a slight increase on Monday, 18 March, building on the gains from the previous week when prices rose by nearly 4 percent. This upward momentum was driven by the belief that the oil supply was tightening, with additional concerns arising from recent attacks on Russian energy infrastructure. Brent crude oil futures for May delivery rose by 32 cents, or 0.4 percent, reaching $85.66 per barrel at 04:16 GMT. Meanwhile, the April contract for U.S. West Texas Intermediate (WTI) crude saw a 40-cent increase, or 0.5 percent, reaching $81.44 per barrel. The more active May delivery contract for WTI traded 37 cents, or 0.5 percent, higher at $80.95 per barrel.
Read more: Oil prices experience modest decline, set to finish week with 4 percent gain
Vandana Hari, founder of oil market analysis provider Vanda Insights, noted that the attacks on Russian refineries last week added a risk premium of $2-$3 per barrel to crude prices, and this risk premium remains in place as more attacks occurred over the weekend. However, Hari added that for any significant movement in oil prices, the market will await fresh signals.
Fed in focus
Investors are closely watching the outcome of the U.S. Federal Reserve’s two-day meeting, which concludes on Wednesday, as it will provide more clarity on the timing of interest rate cuts. Lower interest rates would stimulate demand in the United States, the world’s largest oil consumer, thereby supporting oil prices.
Despite a slight dip on Friday, both benchmark oil contracts recorded gains last week. Oil prices have been rangebound for much of the past month, but a bullish demand report from the International Energy Agency on Thursday, prompted by Houthi attacks in the Red Sea diverting crude and fuel carriers, pushed prices to their highest level since November. The report also indicated a slight supply deficit for this year, a departure from previous expectations of a surplus.
The completion of some refinery projects and strong U.S. fuel demand further contributed to the support of oil prices. As of the close of trading on Friday, Brent and WTI futures were up 11 percent and 13 percent respectively since the beginning of 2024.
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