Crude Oil Trading Reminder: U.S. Merchant Ships Attacked, Concerns About Supply Disruption Grow, Oil Prices Rebound More Than 1%

　　Oil prices rebounded more than 1 per cent on February 26, analysts said, as European diesel demand, constrained by sanctions on Russia and shipping disruptions, pushed prices higher amid concerns that US refinery volumes were being constrained by planned overhauls.

　　Oil prices rebounded more than 1 per cent on Monday, analysts said, as European diesel demand, constrained by sanctions on Russia and shipping disruptions, pushed prices higher amid concerns that US refinery volumes were being constrained by planned overhauls.

　　Brent crude oil April futures closed up $0.91, or 1.11 percent, at $82.53 a barrel on Monday, while U.S. crude oil April futures (WTI) closed up $1.09, or 1.43 percent, at $77.58 a barrel on Monday.

　　"We're all looking at the diesel situation," said John Kilduff, partner at Again Capital LLC.

　　Lower U.S. refining activity and disruptions to global trade have tightened diesel supplies in recent weeks, limiting the impact on the market of record U.S. diesel exports to Europe this month.

　　This month, the United StatesDiesel cracking spreadAt one point, it surged to a four-month high of more than $48 a barrel, curbing arbitrage opportunities for diesel exports to Europe.

　　Houthi rebels in Yemen narrowly missed hitting a US-flagged tanker on Saturday, the US Central Command said. A tanker hit by the group last week has been abandoned and was seen with fuel leaking into the Red Sea.

　　Possible disruptions "are plaguing this market", Kilduff said.

　　Phil Flynn, an analyst at Price Futures Group, said that while early trading on Monday was driven by concerns about inflation continuing to limit demand, the focus shifted to a more fundamental issue.

　　"We seem to be back on the supply side," he said. "Demand is very strong, and at the end of the day, it's about supply and demand."

　　He also said that U.S. refineries are expected to resume production in March after completing planned overhauls.

　　The conflict between Israel and Hamas in the Middle East continues, and U.S. National Security Adviser Sullivan said Sunday that negotiators from the United States, Egypt, Qatar and Israel agreed on the basic framework of a hostage agreement during the Paris talks, but that negotiations are still ongoing.

　　On the demand side, Dennis Kissler, vice-president of trading at BOK Financial, the US financial services firm, said: "With global crude oil inventories below year-ago levels, strong travel reports after the Chinese New Year holiday and the US driving season just around the corner, the market has some fundamental support." Most traders still see better-than-expected demand for crude oil and many hedge funds remain on the sidelines, so there is still a lot of buying power in the market, Kissler said.

　　On the outlook, BMO Bank strategists analysed the outlook for oil. "While WTI oil appears to be comfortably holding at current levels for now, we suspect this may not last long," they said. "Given the historic volatility in crude oil prices, prices could eventually break out of the current trading range, but it is undeniable that we are unsure of the direction of the next major move as uncertainty increases."

　　Goldman Sachs has adjusted its Brent price target to $87 a barrel. This means Brentcrude oil priceThere is still a premium of nearly 9% up for grabs. The Goldman report has several key takeaways: geopolitical premiums remain modest; OPEC overcapacity means limited upside and prices will surge in the summer as Red Sea disruptions weigh on inventories.