Oil futures moved higher Monday to start the week, with the U.S. benchmark remaining well below the $100-a-barrel threshold.
September Brent crude
the global benchmark, rose 88 cents, or 0.9%. $104.14 a barrel on ICE Futures Europe. October Brent
the most actively traded contract, was up 63 cents, or 0.6%, at $99.01 a barrel.
August natural gas
gained 1.1% to $8.39 per million British thermal units.
Oil futures have retreated sharply in July, with pressure tied in part to fears a sharp economic slowdown may be in the offing that would undercut demand. The Federal Reserve is expected to deliver another 75 basis point rise in the fed-funds rate when it completes a two-day meeting on Wednesday. Investors worry the Fed’s aggressive tightening in an effort to rein in inflation running at its hottest in more than 40 years could push the economy into recession.
Rising inventories for gasoline have weighed on crude, signaling that a previous jump to record prices had served to curtail demand.
The futures market, however, continues to signal tight crude supplies, with nearby contracts trading at a significant premium to later contracts. That phenomenon in Brent is largely driven by expectations that “plans for a price cap on Russian oil may have the opposite effect on oil prices than hoped for,” said Warren Patterson, head of commodities strategy at ING, in a note.
U.S. Treasury Secretary Janet Yellen has been advocating a plan that would cap the price paid for Russian oil in an effort to boost pressure on Moscow in response to the invasion of Ukraine.
“The governor of Russia’s central bank has said that Russia would not supply crude oil to any country which caps prices. Although the deputy prime minister had previously said that Russia would not supply oil if the cap was set below production costs,” Patterson said.
On the supply front, Libya’s National Oil Corp. on Saturday said crude-oil production was approaching 1 million barrels a day and could soon reach 1.2 million barrels a day.