SINGAPORE, Nov 18 (Reuters) - Oil prices edged up on

Monday after fighting between Russia and Ukraine intensified

over the weekend, although concerns about fuel demand in China,

the world's second-largest consumer, and forecasts of a global

oil surplus weighed on markets.

Brent crude futures gained 20 cents, or 0.3%, to

$71.24 a barrel by 0130 GMT, while U.S. West Texas Intermediate

crude futures were at $67.11 a barrel, up 9 cents, or

0.1%.

In a significant reversal of Washington's policy in the

Ukraine-Russia conflict, President Joe Biden's administration

has 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.

There was no immediate response from the Kremlin, which has

warned that it would see a move to loosen the limits on

Ukraine's use of U.S. weapons as a major escalation.

"Biden allowing Ukraine to strike Russian forces around

Kursk with long-range missiles might see a geopolitical bid come

back into oil as it is an escalation of tensions there, in

response to North Korean troops entering the fray," IG markets

analyst Tony Sycamore said.

Russia unleashed its largest air strike on Ukraine in almost

three months on Sunday, causing severe damage to Ukraine's power

system.

In Russia, at least three refineries have had to halt

processing or cut runs due to heavy losses amid export curbs,

rising crude prices and high borrowing costs, according to five

industry sources.

Brent and WTI slid more than 3% last week on weak data from

China and after the International Energy Agency forecasted that

global oil supply will exceed demand by more than 1 million

barrels per day in 2025 even if cuts remain in place from OPEC+.

China's refinery throughput fell 4.6% in October from last

year and as the country's factory output growth slowed last

month, government data showed on Friday.

Investors also fretted over the pace and extent of interest

rate cuts by the U.S. Federal Reserve that has created

uncertainty in global financial markets.

In the U.S., the number of operating oil rigs fell by one to

478 last week, the lowest since the week to July 19, Baker

Hughes data showed.