Oil prices edged up on Monday as the prospect of tightening supplies due to OPEC+ production cuts and a resumption in U.S. buying for reserves outweighed concerns about fuel demand in top global oil consumers the United States and China.
U.S. West Texas Intermediate crude was at $70.79 a barrel, up 70 cents or 1%.
Brent crude futures were up 82 cents or 1.10% to $75.12 a barrel.Last week, both benchmarks fell for a fourth consecutive week, the longest streak of weekly declines since September 2022, over concerns the United States could enter a recession amid risks of a historic default at the beginning of June.
“With the uneven re-opening in China and concerns that the U.S is facing a growth slowdown at a time when the X-date for the debt ceiling is rapidly approaching, topped off by a rally in the U.S dollar, market sentiment towards crude oil will remain tepid at best,” IG analyst Tony Sycamore said.
Still, global crude supplies could tighten in the second half as OPEC+ – the Organization of the Petroleum Exporting Countries and allies including Russia – is making additional output cuts that are reducing sour crude volumes.
The group announced in April that some members would cut output further by around 1.16 million barrels per day (bpd), bringing the total volume of cuts to 3.66 million bpd, according to Reuters calculations.
However, Iraq does not expect OPEC+ to make further cuts to oil output at its next meeting on June 4, said its oil minister, Hayan Abdel-Ghani.
Meanwhile, flows of northern Iraqi crude oil to Turkey’s Ceyhan port have yet to resume following Baghdad’s request to restart them last week, industry sources said on Monday, helping keep global supplies tight.
The U.S. could start repurchasing oil for the Strategic Petroleum Reserve (SPR) after completing a congressionally mandated sale in June, Energy Secretary Jennifer Granholm told lawmakers on Thursday.
Meanwhile, leaders of the Group of Seven nations could announce new measures at their May 19-21 meetings that target third countries evading sanctions on Russia over its war in Ukraine, said officials with direct knowledge of the discussions.
The tightening of sanctions will also seek to undermine Russia’s future energy production and curb trade that supports the Russian military, the people said.