Oil prices concluded higher on Monday, buoyed by indications of an improving economy in China, which fueled hopes for increased demand, even as wildfires in Alberta, Canada, posed a threat to supplies.
At 14:30 ET (19:30 GMT), Brent oil futures rose 0.5% to $83.21 a barrel, while U.S. West Texas Intermediate crude futures climbed 0.8% to settle at $78.92 a barrel.
Chinese inflation data boosts optimism
Over the weekend, the release of Chinese inflation data for April indicated a sustained recovery in the consumer price index, fostering hopes that demand and economic growth continue to rebound following significant monetary support from Beijing.
Although China’s oil imports for April dipped slightly from the previous month, they remained largely unchanged compared to the same period last year, reflecting the challenges of a sluggish post-COVID economic recovery.
Alberta wildfire raises supply concerns
Adding to market sentiment on Monday was news of an evacuation alert issued for Fort McMurray, Alberta, due to an out-of-control wildfire southwest of the major Canadian oil town. This development marks an early warning ahead of the wildfire season.
In 2016, a massive wildfire in Fort McMurray led to the evacuation of 90,000 residents and halted over a million barrels per day of oil production.
Global supply dynamics ahead of OPEC+ meeting
Concerns over global supply dynamics persist ahead of the June meeting of the Organization of the Petroleum Exporting Countries (OPEC) and its allies, collectively known as OPEC+.
Goldman Sachs recently stated in a note that it no longer anticipates OPEC+ to partially reverse recent voluntary production cuts next month. The investment bank expects Saudi Arabia’s crude oil supply to remain steady at 9 million barrels per day in July, revising down their earlier estimate of 9.2 million barrels per day.
However, conflicting reports emerged over the weekend, with Iraq’s oil minister suggesting that the country would not agree to further supply cuts. It remains unclear whether this pertains to a rollover of existing cuts or the possibility of deeper reductions.