SINGAPORE (AP) — Oil prices rose 1% on Tuesday, recouping more of last week’s losses as investors focused on tight supplies of crude and fuel products rather than worrying about a recession looming. curbs demand in the future.
Brent crude futures were up $1.08, or about 1%, at $115.21 a barrel by 0400 GMT, posting a 0.9% gain on Monday. The benchmark contract fell 7.3% last week in its first weekly decline in five.
US West Texas Intermediate (WTI) crude oil futures for July, due later Tuesday, rose to $112.01 a barrel, up $2.45, or 2.2%, from the Friday closing. There was no agreement on Monday, which was a public holiday in the United States. WTI fell 9.2% last week.
The most active WTI contract for August was up $2.12 at $110.11 a barrel.
“After being hit in the US long weekend due to the recession and concerns about fuel demand destruction, oil prices are rising again,” said Stephen Innes, managing partner at SPI Asset. Management.
“Those global economic concerns are apparently being offset by prospects for increased demand from the US and China in the near term amid rapid and limited supply.”
Supply concerns are driving the market as Western sanctions on Russian oil take their toll and questions remain about how Russian output could fall due to sanctions on equipment needed for production, analysts said.
“Traders are pricing in tight supply and a slowdown in global economic growth, leading to volatile sessions,” said Tina Teng, an analyst at CMC Markets.
“However, recession concerns may become a major bear in crude markets for the rest of the month.”
The tug-of-war between supply concerns and global growth uncertainty is likely to play out in the market for some time, analysts said.
“It’s a tension that we’ll see play out over the rest of this year,” said Justin Smirk, senior economist at Westpac.
He said it is unclear how big the risk of demand destruction is, given that the global economy is still recovering from the COVID downturn.
“There is the fear of a recession, but we are not there. We still have recovery,” Smirk said.
Weekly US oil inventory data will be delayed one day this week due to the June 16 holiday on Monday, with industry data from the American Petroleum Institute for the week ending June 17 on Wednesday. and data from the US Energy Information Administration on Thursday. (Reporting by Sonali Paul in Melbourne, Koustav Samanta and Isabel Kua in Singapore; editing by Richard Pullin)