By Trixie Yap
(Reuters) – Oil prices edged up on Tuesday, extending previous session gains, as markets contemplated potential supply disruption from Russia after Ukrainian drone attacks on its refineries as well as the prospect of a U.S. central bank interest rate decision.
Brent crude futures edged up 8 cents to $67.52 a barrel by 0632 GMT while U.S. West Texas Intermediate crude was at $63.41, up 11 cents. On Monday, Brent settled up 45 cents at $67.44 while WTI settled 61 cents higher at $63.30.
Ukraine has intensified attacks on Russia’s energy infrastructure in an attempt to impair Moscow’s war capability, as talks to end their conflict have stalled.
“An attack on an export terminal like (Russia’s) Primorsk is aimed more at limiting Russia’s ability to sell its oil abroad, affecting export markets,” said JP Morgan analysts.
“More importantly, the attack suggests a growing willingness to disrupt international oil markets, which has the potential to add upside pressure on oil prices,” they said.
U.S. Treasury Secretary Scott Bessent on Monday said the government would not impose additional tariffs on Chinese goods to encourage China to halt purchases of Russian oil unless European countries hit China and India with duties of their own.
Also on investors’ radar is the U.S. Federal Reserve’s September 16-17 meeting at which the bank is widely expected to cut interest rates.
While lower borrowing costs typically boost fuel demand, analysts were cautious on the health of the overall U.S. economy.
“The recent rebound from the 5 September low in oil prices has indeed been ‘shaky’ … due to lower demand from the U.S. on the backdrop of more data pointing to a weak consumer in the near future,” said OANDA senior market analyst Kelvin Wong.
If the Fed lowers its GDP growth forecasts for 2026 and 2027 and “the projected Fed Funds rate for 2026 is lowered to 2% in line with current market pricing”, that implies a weaker demand environment in the U.S. which could weigh on oil, said Wong.
Markets were also factoring in the likelihood of crude inventory declines in the U.S. last week, with official data expected on Wednesday at 1430 GMT.
U.S. crude inventories likely fell 6.4 million barrels for the week ended September 12, following a 3.9 million build a week earlier, energy strategist Walt Chancellor at Macquarie Group said in a client note.
A Reuters poll on Monday showed analysts expected U.S. crude oil and gasoline stockpiles to have fallen last week, while distillate inventories likely rose. [EIA/S]
(Reporting by Anjana Anil in Bengaluru and Trixie Yap in Singapore; Editing by Christopher Cushing)
