Oil prices rose in early trade on Monday with U.S. fuel demand, tight supply and a slightly weaker U.S. dollar supporting the market, as Shanghai prepares to reopen after a two-month lockdown fuelled worries about a sharp slowdown in growth.
Brent crude futures rose 82 cents to $113.37 a barrel at 0126 GMT, while U.S. West Texas Intermediate (WTI) crude futures climbed 69 cents, or 0.6 per cent, to $110.97 a barrel, adding to last week’s small gains for both contracts.
“Oil prices are supported as gasoline markets remain tight amid solid demand heading into the peak U.S. driving season,” said SPI Asset Management managing partner Stephen Innes.
“Refineries are typically in ramp-up mode to feed U.S. drivers’ unquenching thirst at the pump.”
The U.S. peak driving season traditionally begins on Memorial Day weekend at the end of May and ends on Labour Day in September.
Analysts said despite fears about soaring fuel prices potentially denting demand, mobility data from TomTom and Google had climbed in recent weeks, showing more people were on the roads in places like the United States.
“High frequency data suggests demand continues to grow,” ANZ analysts said in a note.
A weaker U.S. dollar also sent oil higher on Monday, as that makes crude cheaper for buyers holding other currencies.
Market gains have been capped, however, by concerns about China’s efforts to crush COVID with lockdowns, even with Shanghai due to reopen on June 1.
Lockdowns in China, the world’s top oil importer, have hammered industrial output and construction, prompting moves to prop up the economy, including a bigger-than-expected mortgage rate cut last Friday.
The European Union’s inability to reach a final agreement on banning Russian oil for its invasion of Ukraine, which Moscow calls a “special operation”, has also stopped oil prices from climbing much higher.