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Brent crude futures for September settlement rose 79 cents, or
0.77%, to $103.99 a barrel by 1050 GMT, while U.S. West Texas
Intermediate (WTI) crude futures rose 82 cents, or 0.87%, to
$95.52 a barrel.
"A slightly weaker U.S. dollar and improving equity markets are
supporting oil," UBS oil analyst Giovanni Staunovo said on
Monday.
Oil futures have been volatile in recent weeks as traders have
tried to reconcile the possibilities of further interest rate
hikes, which could limit economic activity and thus cut fuel
demand growth, against tight supply from disruptions in trading
of Russian barrels because of Western sanctions amid the Ukraine
conflict.
"Rising recession fears globally do suggest that gains are
likely to be limited in the shorter term, geopolitics aside,"
said Jeffrey Halley, a senior market analyst at OANDA.
Officials at the Fed have indicated that the central bank would
likely raise rates by 75 basis points at its July 26-27 meeting.
China, the world's second-biggest economy, narrowly missed a
contraction in the second quarter, growing just 0.4%
year-on-year, weighed down by COVID-19 lockdowns, a weak
property sector and cautious consumer sentiment.
But a steep front-month premium compared to the second month
continues to signal near-term supply tightness. The spread
settled at $4.82/bbl on Friday, an all-time high when excluding
expiry-related spikes in the two previous months.
Libya's National Oil Corporation (NOC) said it aims to bring
back production to 1.2 million barrels per day (bpd) in two
weeks, from around 860,000 bpd.
But analysts expect Libya's output to remain volatile as
tensions are still high.
Continued tight supply also follows "expectations that Russian
oil supply will edge lower in the months ahead as
widely-expected plans for a price cap on Russian oil may have
the opposite effect on oil prices than hoped for," said Warren
Patterson, head of commodities strategy at ING.
The European Union said last week that it would allow Russian
state-owned companies to ship oil to third countries under an
adjustment of sanctions agreed by member states last week aimed
at limiting the risks to global energy security.
However, Russian Central Bank Governor Elvira Nabiullina said on
Friday that Russia would not supply oil to countries that
decided to impose a price cap on its oil.
(Additional reporting by Yuka Obayashi in Tokyo; editing by
David Evans and Louise Heavens)
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