Oil prices traded within a narrow range on Monday as competing forces of rising global output and concerns over U.S. tariff-driven demand weakness offset supply disruptions from intensified Russia-Ukraine airstrikes. Brent crude fell 0.44% to $67.18 a barrel, while U.S. West Texas Intermediate (WTI) crude also dipped 0.44% to $63.73. Trading volumes were expected to be muted due to a U.S. bank holiday.
Geopolitical tensions provided underlying support as Ukraine vowed to retaliate for Russian drone attacks on its power facilities, with both nations intensifying strikes on each other’s energy infrastructure. This has disrupted Russian oil exports, with weekly shipments from its ports falling to a four-week low. However, traders noted that Russian oil exports to India are still set to rise in September, defying U.S. secondary tariffs on New Delhi.
Market sentiment remains cautious, with a recent Reuters poll indicating oil prices are unlikely to gain much traction this year due to rising output from top producers and the risk of a surplus. Further pressure came from private surveys showing factory activity weakening in key Asian economies due to U.S. tariffs, clouding the regional demand outlook. Adding to the supply glut, U.S. crude production hit a record high in June.
Investors are now looking ahead to key events for direction. The OPEC+ meeting on September 7 will be closely watched for any signals on future supply management. Additionally, a crucial U.S. labor market report later this week will test investor confidence in imminent interest rate cuts, a view that has recently supported riskier assets like commodities.
