Oil prices climb $2 on strong demand, tight supply By Reuters

© Reuters. Models of oil barrels and a pump jack are shown for a rising inventory chart and “$100” in this image, taken Feb. 24, 2022. REUTERS/Dado Ruvic/Illustration

By Bozorgmehr Sharafedin

LONDON (Reuters) – Oil prices rose nearly $2 on Tuesday amid high demand for fuel over the summer, while supplies remain tight amid sanctions on Russian oil following its invasion of Ukraine.

rose $1.80, or 1.6%, to $115.93 a barrel at 1209 GMT.

The US West Texas Intermediate (WTI) crude oil contract for July, which expires later on Tuesday, rose $2.26 or 2.1% to $111.82. The more active WTI contract for August was up $2.37 to $110.36.

UBS analyst Giovanni Staunovo said that despite concerns about economic growth, the latest data on flight activity and mobility on US roads continues to show solid demand for oil.

“We expect oil demand to improve further, benefiting from China’s reopening, summer travel in the Northern Hemisphere and warming weather in the Middle East. growth in demand, we continue to expect higher oil prices,” he said.

Prices were bolstered by supply fears following sanctions on oil shipments from Russia, the world’s second largest oil exporter, and questions about how Russian production could fall due to sanctions on equipment needed for production.

European Union leaders want to keep pressure on Russia at their summit this week by pledging to continue working on sanctions, a draft document shows.

“Supply concerns are unlikely to abate unless the war between Russia and Ukraine is resolved, or unless we see a surge in supply from the US or OPEC,” said Madhavi Mehta, commodities research analyst at Kotak Securities. .

The prospects for successful negotiations for a nuclear deal with Iran and the lifting of US sanctions against Iran’s energy sector are fading.

Iran is further escalating its uranium enrichment by preparing to use advanced centrifuges at its underground site in Fordow, a United Nations nuclear watchdog report seen by Reuters found.

“If Iran’s measures are correct, we probably won’t see a return of Iranian crude oil to the larger world markets anytime soon,” said OANDA analyst Jeffrey Halley.

Weekly US petroleum inventory data is delayed by a day this week due to a US holiday on Monday, with American Petroleum Institute industry data for the week ending June 17 on Wednesday and US Energy Information Administration data for Thursday.

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