Oil rises with summer demand outlook

By Florence Tan

SINGAPORE (Reuters) – Oil prices rose in early trading on Monday, supported by forecasts of a supply deficit arising from peak summer fuel consumption and OPEC+ cuts in the third quarter, although headwinds in global economy and increased non-OPEC+ production have limited gains.

Brent crude futures rose 16 cents, or 0.2%, to $85.16 a barrel by 0032 GMT, while U.S. West Texas Intermediate crude futures were at $81.71 a barrel, up 17 cents, or 0.2%.

Both contracts gained about 6% in June, with Brent closing above $85 per barrel over the past two weeks after the Organization of the Petroleum Exporting Countries and its allies, a group known as OPEC+, extended well part of its deep cuts in oil production. in 2025.

That led analysts to predict supply shortfalls in the third quarter as demand for transportation and air conditioning during the summer reduced fuel reserves.

Hopes for an interest rate cut from the U.S. Federal Reserve and growing geopolitical concerns in Europe and between Israel and Lebanon’s Hezbollah also kept a floor on prices, IG analyst Tony Sycamore said in a note.

WTI’s recent rally could extend to $85 per barrel if prices remain above the 200-day moving average of $79.52, he said.

In the US, oil production and demand reached four-month highs in April, according to the Energy Information Administration’s (EIA) monthly oil supply report published on Friday.

Traders are paying attention to the impact of hurricanes on oil and gas production and consumption in the Americas.

The Atlantic hurricane season began with Hurricane Beryl on Sunday. Beryl, the first Category 4 hurricane on record, headed toward the Windward Islands in the Caribbean, where it is expected to bring potentially deadly winds and flash flooding on Monday, the U.S. National Hurricane Center said.

In China, the latest manufacturing data did not bode well for oil demand in the world’s second-largest crude oil consumer and importer.

China’s manufacturing activity fell for a second month in June while services activity fell to a five-month low, an official survey showed on Sunday, keeping calls alive for more stimulus as the economy struggles to recover.

(Reporting by Florence Tan; Editing by Sonali Paul)