Oil climbs in tight market as US driving season approaches

Brent crude oil futures rose 82 cents to $113.37 a barrel 0126 GMT, while West Texas Intermediate (WTI) crude oil futures rose 69 cents, or 0.6%, 110 $.97 a barrel, adding to last week’s small gains for both contracts.

“Oil prices are supported by the fact that gasoline markets remain tight amid strong demand as we approach the peak driving season in the United States,” said Stephen Innes, managing partner at SPI Asset Management.

“Refineries are typically in ramp-up mode to fuel the unquenchable thirst of American drivers at the pump.”

Peak driving season in the United States traditionally begins on Memorial Day weekend at the end of May and ends on Labor Day in September.

Analysts said that despite fears that soaring fuel prices could dent demand, mobility data from TomTom and Google has increased in recent weeks, showing more people on the roads in places like the United States.

“High frequency data suggests demand continues to grow,” ANZ analysts said in a statement.

A weaker US dollar also lifted oil on Monday, as it makes crude cheaper for buyers holding other currencies.

Market gains, however, were capped by concerns over China’s efforts to crush COVID through lockdowns, even though Shanghai is due to reopen on June 1.

Shutdowns in China, the world’s largest oil importer, have hit industrial production and construction, prompting measures to support the economy, including a bigger-than-expected cut in mortgage rates last Friday.

The European Union’s inability to reach a final agreement on a ban on Russian oil for its invasion of Ukraine, which Moscow calls a “special operation”, has also kept oil prices from climbing much higher.

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