Oil edged up on Monday as fears of a global recession that would hit demand overshadowed concerns of tight supply amid lower OPEC output, unrest in Libya and sanctions on Russia.
Figures on Friday showed Euro zone inflation hit yet another record high in June, firming the case for rapid European Central Bank rate hikes starting this month.
U.S. consumer sentiment hit a record low in June.
U.S. West Texas Intermediate (WTI) crude rose $1.34, or 1.24%, to $109.74 a barrel.
Brent crude climbed $1.67, or 1.50%, to $113.06 a barrel after falling over $1 in early trade.“The risk is tilted to the downside as traders are concerned about slowing oil demand due to a strong possibility of an economic recession taking place in the U.S. and in other parts of the world,” said Naeem Aslam of Avatrade.
Brent came close this year to an all-time high of $147 a barrel reached in 2008 as Russia’s invasion of Ukraine added to supply concerns. Despite concern of a recession, tight supply is limiting losses.
The Organization of the Petroleum Exporting Countries missed a target to boost output in June, a Reuters survey found. Ecuador’s production has been hit by unrest recently, and a strike in Norway could cut supply this week.
“This backdrop of mounting supply outages is colliding with a possible spare production capacity shortage among Middle Eastern oil producers,” said Stephen Brennock of oil broker PVM.
“And without new oil production hitting markets soon, prices will be forced higher.”