By Alex Lawler
LONDON (Reuters) -Oil slipped on Tuesday pressured by the restart of production at Norway’s Johan Sverdrup oilfield, although investor caution arising from fears of an escalation in the Russia-Ukraine war limited the decline.
Equinor has resumed partial production from the oilfield, Western Europe’s largest, following a power outage. An outage at the North Sea field helped prices to climb by over 3% on Monday.
futures were down 56 cents, or 0.8%, to $72.74 a barrel by 0855 GMT, while U.S. West Texas Intermediate crude futures slipped by 43 cents, or 0.6%, to $68.73.
Another continuing outage provided support. Kazakhstan’s biggest oilfield, Tengiz, has reduced oil output by 28% to 30% for repairs whish are expected to be completed by Saturday, the country’s energy ministry said.
A rise in geopolitical tensions also supported prices.
In a significant reversal of policy, U.S. President Joe Biden’s administration allowed Ukraine to use U.S.-made weapons to strike deep into Russia, two U.S. officials and a source familiar with the decision said on Sunday.
The Kremlin said on Monday that Russia would respond to what it called a reckless decision by the Biden administration, having previously warned that such a decision would raise the risk of a confrontation with the U.S.-led NATO alliance.
Investors are wary, said Toshitaka Tazawa, an analyst at Fujitomi Securities, as they are “assessing the direction of the Russia-Ukraine war after the weekend’s escalation”.
While oil’s outright price has found support this week, the market structure has weakened. flipped to contango for the first time since February on Monday in a sign that supply tightness was easing.