Oil prices grew in early trade on Monday, fighting worries the global oil glut may persist as U.S.-China trade tension could hold back an economic recovery even as coronavirus pandemic lockdowns start to ease.
U.S. West Texas Intermediate (WTI) crude futures were up $2.49, or 12.67%, at $22.18. The benchmark contract rose 17% last week.
Brent crude futures were up 9 cents, or 0.34%, at $26.68, after touching a low of $25.53. Brent rose about 23% last week following three consecutive weeks of losses.
The market found support last week as major oil producers led by Saudi Arabia and Russia were set to begin cutting production on May 1, while the top two U.S. producers, Exxon Mobil Corp and Chevron Corp, each said they would cut output by 400,000 barrels per day this quarter.
The output cuts combined with the loosening of business restrictions in some U.S. states and cities around the world were expected to ease the global fuel glut and pressure on storage tanks, helping to drive prices up last week.
U.S drillers cut 53 oil rigs in the week to May 1, bringing the total count down to 325, the lowest since June 2016, energy services firm Baker Hughes said on Friday.
However comments by U.S. President Donald Trump threatening to consider raising tariffs on China to retaliate for the spread of the coronavirus renewed fears that trade tensions could crimp an economic recovery and put a lid on oil price gains.
“The resumption of the trade war will be detrimental to oil prices over the long term,” said Stephen Innes, chief global market strategist at financial services firm AxiCorp.