LONDON: Oil edged higher on Monday as hopes for a boost to demand from the summer driving season in the northern hemisphere offset Chinese data that underscored a bumpy recovery for the world’s biggest crude importer.
Apart from retail sales that beat forecasts due to a holiday boost, the flurry of Chinese data on Monday was largely downbeat. The data followed a survey on Friday showing U.S. consumer sentiment fell to a seven-month low in June.
Global benchmark Brent crude futures were up 33 cents, or 0.4%, to $82.95 a barrel at 1212 GMT. U.S. West Texas Intermediate crude futures gained 25 cents, or 0.3%, to $78.70.
Last week, both benchmarks posted their first weekly gain in four weeks on elevated confidence that oil inventories are set to plunge as the summer season gets under way in the northern hemisphere amid continued OPEC+ supply cuts.
“The crude oil market initially responded negatively to mixed data from China,” said Ole Hansen of Saxo Bank.
“But the outlook for strong fuel demand into the coming quarter and Saudi reassurance about the October hike being subject to prevailing conditions and added focus on quota breakers to bring production down and into line all seems to be supporting.”
Oil prices set for best week in two months on demand outlook
Saudi Arabia has said OPEC+’s planned fourth-quarter increase in output can be can paused or reversed if needed.
Russia and Iraq, which have been pumping more than their OPEC+ quotas, pledged last week to meet their obligations.
Reports from OPEC and the International Energy Agency last week, although differing on the strength of oil demand growth this year, had supported confidence that inventories would be drawn down in the second half.
Still, BofA analysts said in a report that while the market consensus is for higher oil prices in the third quarter, there is a risk to prices if weak supply and demand balances persist.
“It is not yet clear whether balances will firm enough in the third quarter to tip the market from a large apparent surplus into a deficit that can lift prices,” BofA analysts including Francisco Blanch wrote.
On the geopolitical front, concerns of a wider Middle East war lingered after the Israeli military said on Sunday that intensified cross-border fire from Lebanon’s Hezbollah movement into Israel could trigger serious escalation.
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