Oil prices rise as tight supplies compete with economic worries

SINGAPORE, May 15 (Reuters) – Oil prices edged higher on Monday as fuel demand from world oil consumers the United States and China outpaced fuel demand from the U.S. and China, buoyed by an upbeat sentiment from OPEC+ cuts to tightening supplies and the repurchasing of U.S. stockpiles.

Brent crude was up 39 cents, or 0.5%, at $74.56 a barrel by 1120 GMT, while US West Texas Intermediate crude was at $70.45 a barrel, up 41 cents, or 0.6%.

Last week, both benchmarks fell for a fourth week in a row, the longest streak of weekly declines since September 2022, amid concerns that the U.S. could enter recession amid a historic default risk in early June.

“At a time of uneven reopening in China and the ex-date for the debt ceiling fast approaching, concerns that the U.S. is facing a growth slowdown are topped by a rally in the U.S. dollar, with market sentiment on crude oil looking good,” said IG analyst Tony Sycamore.

However, global crude supply could tighten in the second half as the OPEC+ group, the Organization of the Petroleum Exporting Countries, and its allies, including Russia, make further production cuts.

The group announced in April that some members would cut production by about 1.16 million barrels per day, bringing the total level of cuts to 3.66 million bpd, according to Reuters calculations.

However, Iraq does not expect OPEC+ to make further cuts in oil production at its next meeting on June 4, its oil minister Hayan Abdel-Ghani said.

Meanwhile, the flow of northern Iraqi crude to Turkey’s Sayan port has yet to resume following Baghdad’s request last week to resume, industry sources said on Monday, helping to keep global supplies tight.

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The U.S. may resume buying oil for the Strategic Petroleum Reserve (SPR) after ending sales mandated by Congress in June, Energy Secretary Jennifer Granholm told lawmakers Thursday.

Meanwhile, leaders of the Group of Seven (G7) nations may announce new measures at their May 19-21 meetings, aimed at evading sanctions involving third countries, officials with direct knowledge of the discussions said.

Tightening sanctions would undermine Russia’s future energy production and restrict trade that supports the Russian military, the people said.

Statement by Florence Tan; Editing by Muralikumar Anantharaman

Our Standards: Thomson Reuters Trust Principles.

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