Brent loses momentum over supply glut fears

The front-month ICE Brent contract has moved $0.17/bbl lower on the day from Friday, to trade at $68.03/bbl at 09.00 GMT.

IMAGE: Getty Images

Upward pressure:

Ukraine has continued to target Russian energy infrastructure over the weekend. This news has provided some support to Brent’s price.

The Ukrainian army said on Saturday that it had hit Russian oil refineries in Krasnodar and Syzran, according to a Reuters report.

Kyiv's military reported multiple explosions and a fire at the Krasnodar oil refinery, which produces 3 million mt/year of light petroleum products, the report adds.

“Ukrainian drone attacks on Russian energy infrastructure through August led to a spike in domestic fuel prices,” remarked two analysts from ING Bank. “If these attacks intensify, it could support product cracks,” the analysts said.

Downward pressure:

Brent crude has erased last week’s gains as market focus shifted from geopolitical concerns to the prospect of a supply glut later this year, as OPEC+ fully unwinds the existing 2.2 million b/d cut.

The surge in OPEC+ supply is “expected to push the market into surplus later this year,” said ANZ Bank’s senior commodity strategist Daniel Hynes.

The oil producers’ alliance is due to meet on 7 September to discuss production levels, “although no talks have yet been held about its next move,” Hynes added.

By Aparupa Mazumder

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