NEW YORK: Oil prices rose on Monday, as signs of improving demand in top importer China and potential supply disruptions in Canada helped prices bounce from the previous session’s $1 a barrel slide.
Brent crude futures rose 34 cents, or 0.4%, to $83.13 a barrel by 12:39 p.m. ET (1639 GMT). US West Texas Intermediate crude futures rose 55 cents, or 0.7%, to $78.81 a barrel.
Chinese data at the weekend showed consumer prices rising for a third straight month in April while producer prices extended declines, signalling improved domestic demand. The country is also planning to raise 1 trillion yuan ($138.26 billion) to stimulate key sectors of the economy.
On the supply front, investors are looking out for potential oil supply disruptions due to wildfires in Western Canada, which the country’s government has warned could be ‘catastrophic’.
“Canadian oil sands production currently has a 3.3-million-barrel daily capacity, which is very likely be affected moving into the summer,” said Alex Hodes, analyst at energy brokerage StoneX. Elsewhere, in what has become a series of attacks by Russia and Ukraine on each other’s energy infrastructure, Kyiv launched its latest salvo over the weekend with a drone attack that partly shut down the largest refinery in southern Russia, sources told Reuters. Oil prices have also found support from expectations that the Organization of the Petroleum Exporting Countries and its allies, known collectively as OPEC+, will extend supply cuts into the second half of the year have also endured.
No. 2 OPEC producer Iraq is committed to oil production cuts agreed by the producer group, its oil minister told the state news agency on Sunday. Those comments followed his suggestion on Saturday that Iraq would not agree to any additional cuts proposed by the wider group at its meeting on June 1.
Traders said they are more cautious about the Middle East as hopes have been dashed for a ceasefire in Gaza. Israel on Sunday pushed back into North Gaza, while the death toll in Israel’s military operation has passed 35,000 Palestinians, according to Gaza’s health ministry.
Investors will watch the US Consumer Price Index data due on Wednesday for clues to when the Federal Reserve will consider cutting interest rates, Hodes said.