Oil prices rose on Monday as global supply is tightening with lower exports from Saudi Arabia and Russia, offsetting nagging concerns about global demand growth amid high interest rates.
Brent crude climbed 75 cents to $85.55 a barrel by 0301 GMT, while U.S. West Texas Intermediate crude was at $82.05 a barrel, up 80 cents. The September WTI contract expires on Tuesday and the more active October contract gained 73 cents to $81.39 a barrel.
Both front-month benchmark prices snapped a 7-week winning streak last week to post a weekly loss of about 2% after the U.S. dollar strengthened on the possibility that interest rates could remain higher for longer, with China’s worsening property crisis adding to concerns about its sluggish economic growth and oil demand.
Supply is tightening, however, with OPEC+ crude exports set to fall a second month in August, said Stefano Grasso, a senior portfolio manager at 8VantEdge in Singapore, citing preliminary data from shiptracking firm Kpler.
“Overall supply is going down, demand is going up,” Grasso said. “Unless there is a recession and demand slows or drops, OPEC+ is in control.”
The world’s top crude importer is drawing on record inventories amassed earlier this year as Chinese refiners scale back purchases after supply cuts by the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, known as OPEC+, drove global prices above $80 a barrel.
In July, Saudi Arabia’s shipments to China fell 31% from June while Russia, with its discounted crude, remained the Asian giant’s largest supplier, Chinese customs data showed.
Meanwhile, Chinese refiners ramped up refined products exports in July, drawn by strong export margins.
In the United States, the number of operating oil rigs, an early indicator of future output, fell by five to 520 last week, their lowest since March 2022, according to Baker Hughes’ report on Friday.
(Reporting by Florence Tan; Editing by Shri Navaratnam and Tom Hogue)