Oil futures moved higher on Monday as better-than-expected U.S. economic data ease some worries over a potential slowdown in energy demand. Traders are also monitoring talks by Group of Seven nations on additional moves aimed at targeting Russian crude.
West Texas Intermediate crude for August delivery
rose $1.59 cents, or 1.5%, to $109.21 a barrel on the New York Mercantile Exchange.
August Brent crude
the global benchmark, added $1.60, or 1.4%, to $114.72 a barrel on ICE Futures Europe, while the most actively traded September contract
traded at $110.63 a barrel, up $1.52, or 1.4%.
Back on Nymex, July gasoline
shed 0.7% to $3.856 a gallon, while July heating oil
fell 1.7% to $4.288 a gallon.
July natural gas
was up 0.8% at $6.266 per million British thermal units.
Oil rose in the wake of upbeat U.S. economic data, with durable-goods orders up 0.7% in May, compared with a 0.2% advance expected by economists polled by The Wall Street Journal. Separate data also showed pending-home sales rose by 0.7% in May.
Economic data last week was “pretty dismal and weighed on energy products and commodities broadly,” but Monday’s numbers came in better than expected — providing support for oil, said Tyler Richey, co-editor at Sevens Report Research.
He told MarketWatch that last week’s closing low near $104 will be a key support level to watch. If it’s broken, the “technical outlook will shift from bullish to neutral for the weeks and months ahead.”
The G-7 was set to announce an agreement to pursue a price cap on Russian oil, aiming to curb Moscow’s energy revenues, a U.S. official said Monday. The move is part of a joint effort of support for Ukraine that includes raising tariffs on Russian goods and imposing new sanctions on hundreds of Russian officials and entities supporting the four month long war.
“While G-7 discussions focused on ‘capping’ the price of Russian oil offers up supply side support, demand destruction fear is escalating in the background,” analysts at Zaner wrote in a market update Monday, adding that they believe “the embargo of Russian oil supply has been a major failure with major buyers unwilling to punish Russia.”
Carsten Fritsch, commodities analysts at Commerzbank, said it’s “questionable whether countries like India and China will agree to cease purchasing Russian oil, especially as it is trading at a significant discount on the global market price. Instead, India is helping Russia to continue selling its oil despite the West’s sanctions,” he wrote in a note.
Meanwhile, the Organization of the Petroleum Exporting Countries and their allies, known as OPEC+, are set to meet this week to review the market and decide on oil output levels.
Some members of OPEC, such as Saudi Arabia and the United Arab Emirates, have the ability to raise production. Overall, the members have failed to collectively reach their production targets.
Read: Don’t expect any surprises from OPEC+, even as recession worries weigh on oil prices
“ If the EIA data continues to be delayed, “the supply side uncertainty could fuel further gains in the sessions ahead.” ”
— Tyler Richey, Sevens Report Research
Traders continue to await the Energy Information Administration’s release of the weekly U.S. petroleum supply report. The data were due out on Thursday but delayed indefinitely by the EIA. On Monday, the government agency said it discovered a “voltage irregularity” on June 17 that caused hardware failures on two of its main processing servers.
“If the data continues to be delayed, the supply side uncertainty could fuel further gains in the sessions ahead,” said Sevens Report’s Richey.
—The Associated Press contributed to this report.