Last Update: May 23, 2023, 00:57 AM IST
Last week, both oil benchmarks rose nearly 2% in their first weekly gain in five after a large crude supply shutdown in Canada’s Alberta. (Image: Reuters file)
However, oil prices were capped by a stronger dollar and the market awaited news on US debt ceiling talks.
Oil prices rose 1% on Monday on forecasts of strong demand for the second half of the year, while supplies from Canada and OPEC+ fell in recent weeks.
However, oil prices were capped by a stronger dollar and the market awaited news on US debt ceiling talks.
Brent futures for July delivery rose 74 cents, or 1.0%, to $76.32 a barrel by 1:43 p.m. EDT (1743 GMT).
US West Texas Intermediate (WTI) crude for June delivery rose 75 cents, or 1.1%, to $72.30 a barrel, while the more active July contract, which will become the month following Monday’s close, rose 65 cents to $72.34 .
The International Energy Agency (IEA) warned of oil shortages in the second half of the year, when demand is expected to eclipse supply by about 2 million barrels per day (bpd), the Paris-based agency said in its latest monthly report.
A senior Vitol executive said Asia would lead an increase in oil demand of about 2 million bpd in the second half of the year, an increase that could potentially create a supply shortage and push up prices.
Last week, both oil benchmarks rose nearly 2% in their first weekly gain in five after a large crude supply shutdown in Canada’s Alberta.
The effects of voluntary production cuts by the Organization of the Petroleum Exporting Countries and its allies including Russia, known as OPEC+, are also being felt after it came into effect this month.
Oil production in Iraq’s Kurdistan region continued to decline as export flows to Turkey’s Ceyhan port showed some signs of resuming after being halted for nearly two months.
Total exports of crude and oil products from OPEC+ fell by 1.7 million bpd as of May 16, JPMorgan said, adding that Russian oil exports would fall through the end of May.
On Saturday, the Group of Seven (G7) nations at their annual leaders’ meeting pledged to step up efforts to counter Russia’s evasion of price caps on their oil and fuel exports.
However, the G7 meeting upset China, the world’s biggest oil importer. The state-backed Chinese mouthpiece Global Times called the G7 an “anti-China workshop”.
The G7 singled out China on a range of issues, including Taiwan, nuclear weapons, economic coercion and human rights abuses.
“Crude prices are in no man’s land as energy traders look to see what happens with both debt ceiling talks and US-China tensions,” said Edward Moya, senior market analyst at data and analytics firm OANDA.
US President Joe Biden and Congress’ top Republican speaker Kevin McCarthy will discuss raising the federal government’s debt limit on Monday, just 10 days before the US could face an unprecedented default.
The US dollar rose against a basket of other currencies, just below two-month highs, as investors waited for new signs on whether the US Federal Reserve is likely to continue raising interest rates and US debt. Saw the news on the border.
A stronger dollar can reduce demand for oil by making the fuel more expensive for holders of other currencies.
US Minneapolis Fed President Neel Kashkari said it was a “close call” on whether he would vote to raise interest rates or halt the central bank’s tightening cycle when they meet next month.
Higher interest rates push up the cost of borrowing, which can slow the economy and reduce demand for oil.
(This story has not been edited by News18 staff and is published from a syndicated news agency feed – reuters,
