Oil prices rose on Monday, supported by expectations of a supply shortfall from peak summer fuel consumption and OPEC+ cuts in the third quarter, although global economic headwinds and rising non-OPEC+ production capped gains.
Brent crude futures rose 33 cents, or 0.4%, to $85.33 a barrel at 0439 GMT, while U.S. West Texas Intermediate crude futures were at $81.86 a barrel, up 32 cents, or 0.4%.
Both contracts have gained about 6% in June, with Brent trading above $85 a barrel for the past two weeks after the Organization of the Petroleum Exporting Countries and its allies, a group known as OPEC+, extended most of its deep oil production cuts through 2025.
That has led analysts to expect supply shortfalls in the third quarter, as summer demand for transportation and air conditioning squeezes fuel inventories.
On Friday, the Energy Information Administration (EIA) reported that oil production and demand for major products rose to four-month highs in April, supporting prices.
“We continue to maintain a favorable view on Brent, although there are demand concerns, such as US gasoline demand and apparent Chinese demand,” ING analysts led by Warren Patterson said in a note.
Factory activity at China’s small manufacturers grew at the fastest pace since 2021 thanks to orders from abroad, a private index showed, even as a broader survey indicated that weak domestic demand and trade frictions led to another contraction of the industrial sector. China is the world’s No. 2 consumer and largest importer of crude oil.
Hopes of an interest rate cut by the US Federal Reserve and growing geopolitical concerns in Europe and between Israel and Lebanon’s Hezbollah kept a floor under prices, IG analyst Tony Sycamore said in a note.
WTI’s recent rally could extend toward $85 a barrel if prices remain above the 200-day moving average at $79.52, he said.
Traders are alert to the impact of hurricanes on oil and gas production and consumption in the Americas.
The Atlantic hurricane season began Sunday with Hurricane Beryl. Beryl, the earliest Category 4 hurricane on record, is headed toward the Caribbean’s Windward Islands, where it is expected to bring life-threatening winds and flash flooding on Monday, the U.S. National Hurricane Center said. (Reporting by Florence Tan; Editing by Sonali Paul and Stephen Coates)
