Oil prices surge on Monday due to improving demand in the US and China, the top two oil consumers. WTI crude futures rose 1.1% to settle at $79.12 a barrel, while Brent crude futures gained 0.7% to settle at $83.36 a barrel.
Prices were supported by expectations of strong U.S. gasoline demand, as motorist group AAA forecasts this year’s Memorial Day travel activity will be the highest since 2005. A preliminary Reuters poll of analysts suggests that U.S. crude oil stockpiles likely declined last week, indicating improving demand. Chinese data showed consumer prices rising for a third straight month in April, while producer prices extended declines, signaling improved domestic demand. The country plans to raise 1 trillion yuan ($138.26 billion) for economic stimulus.
On the supply front, investors are watching for potential oil supply disruptions in Western Canada due to wildfires the government has warned could be catastrophic. Canadian oil sands production currently has a 3.3 million barrel daily capacity, which is likely to be affected moving into the summer.
Oil prices have also found support from OPEC+ expectations of extending supply cuts into the second half. Traders are more cautious about the Middle East as hopes for a ceasefire in Gaza have been dashed.
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