Oil prices climbed higher on Monday, recovering from early losses, as investors weighed Russia’s plans to reduce crude production and short-term demand concerns ahead of U.S. inflation data this week.
Brent futures for April delivery increased 22 cents, or 0.3%, to $86.61 a barrel, while U.S. crude increased 42 cents, or 0.5%, to $80.14 per barrel rise.
“The fundamental backdrop for oil is still very strong,” said Phil Flynn, analyst at Price Futures Group.
“With China reopening, we will see more demand, and Russia and OPEC have the same or less supply, which is bullish.”
Oil prices soared on Friday to their highest in two weeks after Russia, the world’s third-biggest oil producer, said it would reduce crude production in March by 500,000 barrels per day (bpd), or roughly 5% of output, in retaliation against Western sanctions imposed on its exports in response to its invasion of Ukraine.
The United Arab Emirates’ energy minister said there was no need for the OPEC+ group of oil-producing countries to convene earlier than planned as the market was balanced.
Both the Brent and WTI contracts increased more than 8% last week, lifted by optimism over demand recovery in China after COVID restrictions were abandoned in December.
U.S. main stock indexes also jumped on Monday.
The U.S. Federal Reserve has been hiking interest rates to curb inflation, leading to concerns the move would weaken economic activity and demand for oil.
Buy Crypto Now“It is difficult to overstate the importance of this single data point, as traders and the Fed look for confirmation of the gradual downward trend of the past few months,” said Matthew Ryan, head of market strategy at financial services firm Ebury.
Additionally, supply concerns were eased somewhat as a cargo of Azeri crude departed from Turkey’s Ceyhan port on Monday, the first since a destructive earthquake in the region on Feb. 6.
Ceyhan is the storage and loading point for pipelines that transport oil from Iraq and Azerbaijan.
Also on the supply side, U.S. shale crude oil production in the seven largest shale basins is expected to increase to its highest on record next month, the Energy Information Administration said on Monday.
