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Oil prices began the week on a positive note, bolstered by data showing cooling U.S. inflation, which revived hopes for monetary policy easing in 2024, supporting global economic growth and oil demand.
Brent crude futures rose $0.26 (0.4%) to $73.20 per barrel, while West Texas Intermediate (WTI) crude climbed $0.31 (0.5%) to $69.77 per barrel as of early trading Monday.
Market Sentiment Supported by Inflation Data and Shutdown Resolution
Analyst Tony Sycamore of IG Markets noted that risk assets, including crude oil and U.S. equity futures, have started the week on firmer footing due to easing inflation concerns. He added that the U.S. Senate’s resolution of a brief government shutdown over the weekend also contributed to market optimism.
This recovery follows a challenging week for oil markets, where prices dropped over 2% on worries about global economic growth and constrained oil demand. The Federal Reserve’s cautious outlook and warnings from Sinopec, Asia’s top refiner, forecasting China’s oil demand peaking by 2027, weighed on sentiment.
Supply Concerns Ease as Druzhba Pipeline Resumes Operations
Fears over European oil supply were alleviated after reports that the Druzhba pipeline, a critical conduit for Russian and Kazakh oil to Hungary, Slovakia, the Czech Republic, and Germany, had resumed operations.
The pipeline, which was halted last Thursday due to technical issues at a Russian pumping station, resumed shipments on Saturday, according to Belarus’ BelTa state news agency. Hungarian Foreign Minister Peter Szijjarto confirmed on Sunday that supplies to Hungary had restarted. The pipeline was previously delivering around 300,000 barrels per day of crude.
U.S. Pressures EU on Energy Imports
In a separate development, U.S. President Donald Trump on Friday called on the European Union to increase imports of U.S. oil and gas or face potential tariffs on its exports. The European Commission responded by expressing willingness to discuss strengthening energy sector ties with the U.S.
Trump also raised tensions with Panama, threatening to reassert U.S. control over the Panama Canal, accusing the nation of charging excessive rates for its use. Panamanian President Jose Raul Mulino issued a sharp rebuke in response.
Oil Rig Count Rises in the U.S.
Adding to supply dynamics, the Baker Hughes oil rig count rose by one to 483 last week, the highest level since September. This signals increasing U.S. crude production capacity, which could weigh on prices in the medium term.
Outlook for Oil Markets
While easing inflation and supply concerns provide a short-term boost, broader economic growth uncertainties and geopolitical risks continue to cloud the outlook for oil markets. Investors are closely watching monetary policy developments, China’s demand trajectory, and geopolitical tensions, particularly with the U.S. pressing its trade and energy agenda globally.
