Brent added 1.5% in London, while the most active West Texas Intermediate contract also traded higher. There was a renewed surge in the premium of refined fuels over crude, indicating a continued scarcity of supply in oil products like diesel. President Biden said he’s aiming to decide this week whether to move to suspend the federal gasoline tax.
The oil market has been vulnerable to any signs of supply disruption since Russia’s invasion of Ukraine upended global commodity markets. Petroecuador said Monday it may have to halt oil exports due to strikes, while Libya’s oil minister has reported highly volatile production numbers so far this month.
Crude is headed for a quarterly gain as traders weigh conflicting forces that have stoked volatility. On Friday prices shed several dollars as concerns grow that the Fed’s pivot toward tighter monetary policy will lead to an economic slowdown.
“It seems that after Friday’s price fall triggered by growing worries about inflation, attention shifted back to supply issues and the oil complex started its recovery led by distillates,” said Tamas Varga, an analyst at brokerage PVM Oil Associates. “Prolonged weak economic performances should ultimately take its toll on demand toward the last quarter of the year.”
The US Treasury Secretary said talks are continuing on how to cap the price of Russian oil, possibly through a plan that offers exceptions to a European Union insurance ban. When asked whether such measures would be ready for G-7 leaders who meed June 26-28 she said “stay tuned.”
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Exxon Mobil Corp. said global oil markets may remain tight for another three to five years largely because of a lack of investment since the pandemic began. It’ll take time for oil firms to catch up on the investments needed to ensure there’s enough oil supply, CEO Darren Woods said Tuesday.