Oil Rises in Tight Market as US Driving Season Approaches

A maze of crude oil pipes and valves is shown during a Department of Energy tour at the Strategic Petroleum Reserve in Freeport, Texas, U.S. June 9, 2016. REUTERS/Richard Carson/File photo

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MELBOURNE, May 23 (Reuters) – Oil prices rose in early trading on Monday with U.S. fuel demand, tight supply and a slightly weaker U.S. dollar supporting the market as Shanghai braces for reopen after a two-month shutdown that raised concerns about a sharp slowdown. growing

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

“Oil prices are supported as gasoline markets remain tight amid strong demand ahead of peak US driving season,” SPI Asset Management managing partner Stephen Innes said.

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“Refineries are often in throttle mode to feed the insatiable thirst of American drivers at the pump.”

Peak driving season in the US traditionally begins on Memorial Day weekend in late May and ends on Labor Day in September.

Analysts said that despite fears that rising fuel prices could hit demand, mobility data from TomTom and Google have risen in recent weeks, showing more people are on the roads in places like USA.

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

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

However, market gains have been capped by concerns over China’s efforts to crush COVID with lockdowns, even with Shanghai set to reopen on June 1.

Lockdowns in China, the world’s top oil importer, have hit industrial production and construction, prompting measures to prop up the economy, including a larger-than-expected mortgage rate cut last Friday. read more

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 prevented oil prices from rising much higher. read more

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Reporting from Sonali Paul in Melbourne; Edited by Sonali Desai

Our standards: the Thomson Reuters Trust Principles.

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