Oil prices climbed on Monday, building on recent gains driven by anticipated tighter supply resulting from OPEC+ production cuts, disruptions to Russian refineries, and positive Chinese manufacturing data indicating a potential uptick in demand.
Brent crude rose by 29 cents to $87.29 a barrel, following a 2.4% increase last week, while U.S. West Texas Intermediate crude reached $83.48 a barrel, up 31 cents, after a 3.2% gain the previous week. Trade volumes were expected to be subdued on Monday due to Easter holidays in several countries. Both Brent and WTI benchmarks closed higher for the third consecutive month in March, with Brent maintaining levels above $85 a barrel since mid-March.
OPEC+ members have committed to extending production cuts until the end of June, which is anticipated to tighten crude supply during the summer in the Northern Hemisphere. Russian oil companies are focusing on reducing output rather than exports in the second quarter to align with OPEC+ production cuts. Drone attacks on Russian refineries have disrupted fuel exports, impacting high-sulphur fuel oil shipments processed at Chinese and Indian refineries.
Strong demand fundamentals in the second quarter of 2024, along with geopolitical risks and supply disruptions, are supporting oil prices. Additionally, positive Chinese manufacturing activity in March and expectations of U.S. Federal Reserve interest rate cuts are bolstering investor sentiment towards the global economy and oil demand.