Oil prices rose as a major pipeline connecting Kazakhstan's fields to Russia's Black Sea coast halted loading after one of its three berths was damaged by a Ukrainian attack in the region over the weekend, while traders assessed the potential for a U.S. military operation in Venezuela alongside expectations of oversupply.

West Texas Intermediate oil prices traded above $59 on Monday and had previously risen as much as 2.4%. The Caspian Pipeline Consortium carries the bulk of Kazakhstan's crude exports, which have averaged 1.6 million barrels per day so far this year. The berth was severely damaged after the explosion, a person familiar with the matter said.

CPC said "further operations are impossible" at the berth, responding to questions about the damage. Ukraine has not commented on the incident, although it confirmed separate attacks on oil refineries and tankers over the weekend as it steps up attacks on Russian oil targets amid a nearly four-year war.

The infrastructure attacks come as the global oil market is moving into what is expected to be a period of significant oversupply. Trend-following commodity trading advisors were 90% short on Monday, according to data from Bridgeton Research Group. Some short-term advisors bought on Monday as prices rose.

The extreme bearish bias of algorithmic traders makes the market vulnerable to a larger surge on bullish developments, as these traders largely follow the trend and amplify price movements.

Oil prices are coming off a monthly decline, with futures under pressure from the prospect of oversupply next year. However, geopolitical tensions from Russia to Venezuela—where President Trump warned airspace should be considered closed over the weekend - add bullish risks to prices. The White House will hold a meeting on next steps regarding Venezuela later Monday, CNN reported.

"While the market outlook is bearish with expectations of a large surplus, lingering supply risks mean these bearish fundamentals will take longer to be fully reflected in prices," said Warren Patterson, Singapore-based head of commodity strategy at ING Groep NV.

Meanwhile, the OPEC+ producer group, led by Saudi Arabia, reaffirmed its three-month plan to halt production increases in the first quarter of next year. OPEC+ reiterated that the move reflected weaker seasonal market conditions.

WTI for January delivery rose 1.3% to $59.31 per barrel at 11:21 a.m. in New York. Brent for February settlement rose 1.2% to $63.15 per barrel. (alg)

Source: Bloomberg