Nick Oxford | Reuters
Brent crude oil futures climbed 23 cents to $67.26 a barrel, while U.S. crude settled 0.4 percent lower at $58.82 per barrel.
“The oil market was worried about a global recession, and now we’re kind of shaking that off,” said Phil Flynn, an analyst at Price Futures Group in Chicago.
“Now we’re focusing on (oil) inventories ... and people aren’t going to want to be short into the inventory report, which is probably going to show another big drawdown.”
Weekly figures on U.S. oil data from the American Petroleum Institute (API), an industry group, will be released on Tuesday, followed by the official Energy Information Administration (EIA) figures on Wednesday. 1/8API/S 3/8
U.S. crude inventories last week were forecast to have drawn down for a third straight week, after slumping nearly 10 million barrels as exports rose close to record highs in last week’s EIA report. 1/8EIA/S 3/8
“We expect U.S. crude balances to see some additional tightening as crude exports remain sharply elevated and imports are likely downsized,” Jim Ritterbusch, president of Ritterbusch and Associates, said in a note.
”(But) we see a reduction in the rate of global oil demand growth as becoming a larger price influencer during the next few weeks,” Ritterbusch said.
Oil prices took a hit last week after cautious remarks by the U.S. Federal Reserve and weak factory data from the United States, Europe and Japan led to the inversion of U.S. Treasury yield curve for the first time since 2007.
Historically, an inverted yield curve, where long-term rates fall below short-term ones, has pointed to an upcoming recession.
Chicago Federal Reserve Bank President Charles Evans on Monday said it was understandable for markets to be nervous when the yield curve flattens, but he was still confident about the U.S. economic growth outlook.
An improved index on Germany’s business climate dispelled some recession concerns that flared after manufacturing output data from Europe’s biggest economy shrank for the third straight month.
Ongoing supply cuts by the Organization of the Petroleum Exporting Countries and allies such as Russia also supported prices. OPEC’s de-facto leader, Saudi Arabia, appears to be pushing for a Brent crude price of over $70 per barrel.
Commerzbank noted declines in U.S. crude stocks and expenditure by U.S. shale firms were also providing support.
“Oil market-specific reports, which point to tighter supply, are preventing prices from falling any more sharply.”