Oil prices rise on summer demand optimism

By Florence Tan

SINGAPORE (Reuters) – Oil prices rose on Monday, buoyed by forecasts of a supply shortfall from peak summer fuel consumption and third-quarter OPEC+ cuts, although global economic headwinds and rising non-OPEC+ output capped gains.

Brent crude futures were up 53 cents, or 0.6 percent, at $85.53 a barrel by 0729 GMT, while U.S. West Texas Intermediate crude futures were at $82.05 a barrel barrel, up 51 cents or 0.6%.

Both contracts gained about 6 percent in June, with Brent settling above $85 a barrel in the past two weeks after the Organization of the Petroleum Exporting Countries (OPEC) and their allies, a group known as OPEC+, and -they expanded most of the oil production. reduces well in 2025.

That has led analysts to forecast supply shortfalls in the third quarter as demand for transportation and air conditioning in the summer eats away at fuel stocks.

On Friday, the Energy Information Administration (EIA) reported that oil production and demand for major products rose to a four-month high in April, supporting prices.

“We continue to have a favorable view on Brent, although there are demand concerns such as US gasoline demand and apparent Chinese demand,” ING analysts led by Warren Patterson said in a note.

Factory activity among smaller Chinese manufacturers rose at the fastest pace since 2021 on overseas orders, a private index showed, even as a broader survey indicated weak domestic demand and trade frictions led to another contraction of the industrial sector. China is the world’s second largest consumer and largest importer of crude oil.

Hopes of an interest rate cut by the US Federal Reserve and growing geopolitical concerns in Europe and between Israel and Hezbollah in Lebanon also kept a floor under prices, IG analyst Tony Sycamore said in a note.

WTI’s recent rally may extend to $85 a barrel if prices remain above its 200-day moving average at $79.52, he said.

Traders are wary of the hurricanes’ impact on America’s oil and gas production and consumption.

The Atlantic hurricane season kicked off on Sunday with Hurricane Beryl. Beryl, the earliest Category 4 hurricane on record, headed toward the Windward Islands in the Caribbean, where it is expected to bring life-threatening winds and flash flooding on Monday, the US National Hurricane Center said.

(Reporting by Florence Tan; Editing by Sonali Paul, Stephen Coates and Sherry Jacob-Phillips)