Oil prices rise in a tight market ahead of the upcoming US driving season

A maze of crude oil pipes and valves is pictured during a tour by the Department of Energy at the Strategic Petroleum Reserve in Freeport, Texas, U.S. June 9, 2016. REUTERS/Richard Carson/File Photo

Oil prices gained in early trade on Monday, supported by U.S. gasoline demand, tight supply, and a weaker U.S. currency, as Shanghai readies to reopen after a two-month lockdown that stoked fears of a severe slowdown in economic development.

Brent crude prices increased 82 cents to $113.37 per barrel at 01:26 GMT, while U.S. West Texas Intermediate (WTI) crude futures advanced 69 cents, or 0.6%, to $110.97 per barrel, the week's modest gains for both commodities.

"Oil prices are supported as gasoline markets remain tight amid solid demand heading into the peak U.S. driving season," said Stephen Innes, managing partner of SPI Asset Management.

"Refineries are typically in ramp-up mode to feed U.S. drivers' unquenching thirst at the pump."

Peak driving season in the United States typically runs from Memorial Day weekend at the end of May to Labor Day in September.

Mobility data from TomTom and Google have increased over the past few weeks, indicating that more people are on the roads in locations like the United States, despite concerns that rising fuel prices could dampen demand.

Analysts at ANZ stated in a report that "High frequency data suggests demand continues to grow,"

Oil prices rose on Monday due to a lower U.S. dollar, which makes petroleum cheaper for purchasers holding other currencies.

Even though Shanghai is scheduled to reopen on June 1, market gains have been restrained by worries over China's efforts to smash COVID with lockdowns.

Lockdowns in China, the world's largest oil importer, have crippled industrial output and construction, forcing measures to stimulate the economy, including a larger-than-anticipated reduction in mortgage rates last Friday.

The inability of the European Union to get a definitive agreement on an embargo on Russian oil for its invasion of Ukraine, which Moscow refers to as a "special operation," has also prevented oil prices from rising significantly higher.

Publish : 2022-05-23 09:16:00

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