By Adedapo Adesanya
The crude oil market rose more than 1 per cent a barrel on Monday, boosted by the prospect of tightening supplies in Canada and elsewhere, although recession fears kept pressuring the market.
Brent crude futures closed at $75.23 per barrel after gaining $1.06 or 1.4 per cent, as the US West Texas Intermediate (WTI) crude futures traded at $71.11 a barrel after growing by $1.07 or 1.5 per cent.
Wildfires raged in Alberta, Canada, shutting in large amounts of crude supply, and prices rose on fears they could worsen.
At least 300,000 barrels of oil equivalent per day production was shut in last week in Alberta.
In 2016, wildfires knocked more than a million barrels of oil equivalent per day of production offline there.
Officials in Alberta expect hot and dry weather conditions to continue after they caused an upsurge in wildfires and a rise in home evacuation orders, thereby bringing about disruptions.
This is as global crude supplies could also tighten in the second half as the Organisation of the Petroleum Exporting Countries and allies, including Russia, jointly known as OPEC+, plan additional output cuts.
Analysts noted that the OPEC+ cuts are likely to have a greater impact as we move through the summer, as previous attempts to balance the markets were offset by seasonal weakness and the release of strategic reserves.
Also, the US could start repurchasing oil for the Strategic Petroleum Reserve (SPR) after completing a congressionally mandated sale in June.
Fears of a slowdown in the global economy limited gains in oil prices.
Last week, oil benchmarks fell for a fourth consecutive week, the longest streak of weekly declines since September 2022, over fears of a US recession and risks of a historic default on government debt in early June.
Ms Jennifer Granholm told lawmakers her department could start repurchasing oil for the SPR after completing a congressionally mandated sale next month.
“That congressionally mandated sale of 26 million barrels will be completed by June, and it’s at that point where we will flip the switch and then seek to purchase,” Ms Granholm told lawmakers in a hearing in the US House of Representatives last week.
The Biden administration last year conducted the largest-ever sale from the SPR of 180 million barrels. That and other sales last year have pushed the level of the reserve to about 372 million barrels, the lowest since 1983.
