Oil prices rose on Monday, fuelled by increasing summer demand optimism and the supply cuts by the Organisation of the Petroleum Exporting Countries (OPEC).
The rising gains in the oil market were controlled by other producers, indicating volatility, reported Reuters.
On Monday, Brent crude futures rose 0.81 per cent or 69 cents to $85.69 per barrel as of 13:36 (GMT). The US West Texas Intermediate (WTI) crude futures were also up by 0.72 per cent or 59 cents at $82.13. Both the commodity contracts increased nearly 6 per cent in June, with Brent settling around $85 per barrel after OPEC extended its supply cuts to 2025.
On June 28, the Energy Information Administration (EIA) published a report stating that oil production and demand reached a four-month high in April 2024.
This also caused analysts to focus on forecasting the supply deficits in the third quarter of the year as transportation and demand for air-conditioning during the summer need more stock in reserve.
“Demand indicators look solid, especially in the all-important US market, and peak refinery demand for crude is now firmly in place and should last through August,” reported Reuters, citing a JPMorgan analyst client note.
Commodity traders will be looking out for the impact of hurricanes on oil and gas production and consumption in America leading to a fluctuation in prices. The hurricane season in the Atlantic has started with Hurricane Beryl on Sunday.
“Oil prices have been converging with our fair value estimates recently, revealing the underlying strength in fundamentals through a clearing in the fog of war,” Amarpreet Singh, an analyst at Barclays, told the Livemint on Friday. The analyst firm expects Brent crude to remain around $90 per barrel over the coming months.
“Increased volatility is anticipated in wider markets this week as elections dominate the agenda in Europe and UK, while in the US concerns over President Joe Biden’s fitness for office, let alone re-election, is dominating the news,” Panmure Gordon analyst Ashley Kelty told Reuters.
