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On
Monday, oil rose over 1% in muted trade owing to public holidays
in Britain and the United States, with hopes of strong fuel
demand with the start of the U.S. summer driving and vacation
season providing support.
The July contract for Brent, the global benchmark, rose 13 cents
or 0.2% to $83.23 a barrel by 1015 GMT. U.S. West Texas
Intermediate (WTI) crude was at $78.91, up $1.19 or 1.5%, from
Friday's close, having traded through a U.S. holiday to mark
Memorial Day without a settlement.
"Oil has been in a recovery mode lately, perhaps driven by
expectations of strong fuel demand due to the start of the
summer driving and vacation season," said Charalampos Pissouros,
analyst at broker XM.
Worries over U.S. interest rates remaining elevated for a longer
period contributed to a weekly loss for crude last week. Higher
rates boost the cost of borrowing, which can dampen economic
activity and demand for oil.
"Despite the indisputably brighter mood seen in the last two
days, interest rate concerns will most plausibly act as a
(brake) on further attempts to send oil prices meaningfully
higher in the immediate future," said Tamas Varga of broker PVM.
Nonetheless, despite the general view that high interest rates
could result in softer oil demand growth, "real-time mobility
data indicates oil demand growth is still broadly healthy," UBS
analyst Giovanni Staunovo wrote in a client note.
On the air travel front, U.S. seat numbers on domestic flights
for May rose by 5% month on month and almost 6% year on year to
slightly above 90 million, data from flight analytics firm OAG
showed, surpassing 2019 levels.
Coming up is the online meeting of OPEC+ producers on Sunday,
where traders and analysts are expecting 2.2 million barrels per
day of voluntary production cuts to stay in place.
"It is a fair assumption that no changes in production levels
will be forthcoming," PVM's Varga added regarding the OPEC+
meeting.
(Additional reporting by Yuka Obayashi in Tokyo and Trixie Yap
in Singapore; editing by Jason Neely and Philippa Fletcher)
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