Title: Oil prices climb on market caution over tight supply

Jun 21, 2022 03:10AM ET

By: AnalysisWatch

Oil prices rose on Tuesday, recouping some of last week's losses, as investors focused on tight supplies of crude and fuel products rather than concerns that a recession could dampen future demand.

Brent crude futures rose 81 cents, or 0.7 percent, to $114.94 a barrel at 0703 GMT, after rising 0.9 percent on Monday. The benchmark contract fell 7.3 percent last week, its first weekly decline in five years.

U.S. West Texas Intermediate (WTI) crude futures for July, which expire later on Tuesday, rose to $111.19 a barrel, up $1.63, or 1.5%, from Friday's close. There was no settlement on Monday as it was a US holiday. WTI fell 9.2% last week.

The more active WTI contract for August rose $1.84 to $109.83 a barrel.

Supply concerns are likely to persist in the coming months as OPEC+ countries, the world's top oil producers, may not have enough spare capacity... The summer travel season and the easing of COVID-19 restrictions in China will further boost demand.

Analysts said prices were supported by supply concerns after Russia, the world's second-largest oil exporter, imposed sanctions on oil shipments following its invasion of Ukraine, raising questions about the extent to which Russian production could fall due to sanctions on the assets needed to produce it.

Until the war between Russia and Ukraine is settled or supply rises sharply in either the US or OPEC, supply concerns are unlikely to ease.

With growth concerns high, the market's reaction to economic numbers could intensify in the near term, and if there are signs of a slowdown, prices could come under pressure.

The back-and-forth between supply concerns and uncertainty about global growth will continue to affect the market for some time, analysts say.

Weekly U.S. oil inventory data will be delayed by a day this week because of the Juneteenth holiday on Monday, with industry data from the American Petroleum Institute for the week ending June 17 due on Wednesday and data from the U.S. Energy Information Administration on Thursday.

Oil prices rise on market caution over tight supply