Ammon News - Oil prices edged up on Tuesday, extending the previous day's rally driven by a halt in production at Norway's Johan Sverdrup oilfield, though investors remained cautious amid fears of an escalation in the Russia-Ukraine war.

Brent crude futures for January delivery rose 15 cents, or 0.2%, to $73.45 a barrel by 0430 GMT, while U.S. West Texas Intermediate crude futures for December delivery were at $69.31 a barrel, up 15 cents, or 0.2%. The more active WTI January contract rose 13 cents, or 0.2%, to $69.30.

Both benchmarks climbed more than $2 a barrel on Monday after Norway's Equinor (EQNR.OL), opens new tab said it has halted output from its Johan Sverdrup oilfield, Western Europe's largest, due to an onshore power outage.

In a significant reversal of Washington's policy, 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, "assessing the direction of the Russia-Ukraine war after the weekend's escalation."

Meanwhile, traders began shifting WTI trades to the January contract ahead of the expiration of the December contract on Wednesday.

WTI flipped to contango for the first time since February on Monday, with January delivery trading at a premium to the December contract in a sign that supply tightness was easing.

Reuters