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MELBOURNE – Oil prices rose in early trade on Monday on strong US demand for energy, tight supply and a weaker US dollar to support the market, as Shanghai prepares to reopen after a two-month lockdown that has caused a sharp decline in growth concerns.
Brent crude futures rose 82 cents to $ 113.37 a barrel at 0126 GMT, while US West Texas Intermediate (WTI) crude futures rose 69 cents, or 0.6%, to $ 110.97 a barrel, adding small gains to both deals last week.
Stephen Innes, SPI Asset Management Managing Partner, said:
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“Refineries are usually in ramp-up mode to quench the unquenchable thirst of U.S. drivers at the pump.”
The US peak driving season traditionally begins on Memorial Day weekend in late May and ends on Labor Day in September.
Analysts say that in order to reduce potential demand, despite fears of rising fuel prices, TomTom and Google’s dynamics data have increased in recent weeks, showing that more people were on the streets in places like the United States.
“High-frequency data suggests that demand continues to grow,” ANZ analysts said in a note.
A weaker U.S. dollar also sent more oil on Monday, as it makes crude prices crude for buyers of other currencies.
However, market gains have been limited due to concerns about China’s efforts to crush Kovid through the lockdown, even with the June 1 reopening with Shanghai.
Lockdowns in China, the world’s top oil importer, have hurt industrial production and construction, prompting moves to push the economy forward, with a bigger drop than expected mortgage rates last Friday.
The European Union’s inability to reach a final agreement on Russia’s oil embargo for its invasion of Ukraine, which Moscow has called a “special operation”, has also stopped oil prices from rising too much.
(Reporting by Sonali Paul in Melbourne; Editing by Sonali Desai)