Oil rose well above $69 a barrel on Monday, buoyed by news leading exporter Saudi Arabia would keep Opec supply curbs in place through July. The sharp gains came alongside a broad rebound in other commodities markets after uncertainty over interest rates and a strengthening US dollar led investors to liquidate assets late last week.
London Brent crude, currently seen as more representative of the global market, settled up 87 cents to $69.56 a barrel, after falling $2.62 on Friday. US crude rose $1.21 to $65.97 a barrel.
"It's a bounce from Friday, which was overdone," said Phil Flynn, analyst at Alaron trading in Chicago.
Opec has agreed since late last year to cut a total 1.7 million barrels per day (bpd) of output, roughly 6 percent of supplies. The reduction, combined with low gasoline stocks in top consumer the United States, helped lift oil from around $50 a barrel in January.
On Monday, Saudi Arabia told Asian and European lifters supplies would continue at reduced levels in July. "The decision fits well with the tone assumed by several Opec members recently, revealing no desire to lift production or to gather ahead of the next official meeting," Barclays Capital analyst Kevin Norrish wrote in a research note.
Opec's next meeting is due on September 11. Some analysts had predicted Opec would begin easing output restrictions to take advantage of prices hovering around $70, near a nine-month high.
BNP Paribas's O'Callaghan said there was a risk that Opec was "leaving in place cuts that reflected a more comfortable market balance in the first half of the year."
Worries over Iran's nuclear dispute with the United Nations have been another driving factor for oil prices this year. The International Atomic Energy Agency, the UN's nuclear watchdog, said on Monday that Iran's nuclear behaviour poses a serious concern it might gain the ability to build atom bombs.
Iran, the world's fourth-largest oil exporter, says it is developing its nuclear research to produce electricity and has refused to halt its program.
Adding some support were expectations that US crude oil stockpiles fell last week. Crude stocks probably fell by 900,000 barrels while gasoline stocks gained 1.9 million barrels, oil analysts polled by Reuters said on Monday.
The US Energy Information Administration will release its weekly inventory data on Wednesday morning.
SINGAPORE: Oil prices edged higher on Monday, as dealers saw a buying opportunity after a sharp slide, with Opec producers maintaining supply curbs and worries remaining over US summer gasoline supplies.
London Brent crude, seen as currently more representative of the global market, rose 19 cents to $68.79 a barrel at 0412 GMT, after plunging by $2.62 on Friday amid a commodities sell-off on fears of slower economic growth.
US crude rose 15 cents to $64.91 after a $2.17 drop. "It's a light correction after such a decline I'm not confident that the drop-off has been stopped," said Ken Hasegawa at Himiwari CX in Tokyo.