LONDON: Oil prices edged higher on Monday after losing about $1 a barrel in the previous session on signs that U.S. policymakers are likely to keep interest rates higher for longer.
Brent crude futures were up 55 cents at $83.34 a barrel by 1239 GMT. U.S. West Texas Intermediate crude futures rose 62 cents to $78.88.
Though prices were supported by a few factors last week, including a lack of progress in the latest round of negotiations to halt hostilities in Gaza, economic factors are back in the spotlight.
Commentary from policymakers suggests that a lowering of borrowing costs is expected sooner in the UK and Europe than in the United States.
U.S. inflation data this week will further inform the Federal Reserve on interest rate policy.
Analysts expect the U.S. central bank to keep its policy rate on hold for longer, supporting the dollar and making dollar-denominated oil more expensive for investors holding other currencies.
Meanwhile, Chinese data at the weekend showed consumer prices rising for a third straight month in April while producer prices extended declines, signalling improved domestic demand.
On the supply front, in what has become a series of attacks by Russia and Ukraine on each other’s energy infrastructure, Kyiv launched its latest salvo over the weekend with a drone attack that partly shut down the largest refinery in southern Russia, sources told Reuters.
Expectations that the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known collectively as OPEC+, will extend supply cuts into the second half of the year have also endured.
Iraq, the second-largest OPEC producer, is committed to voluntary oil production cuts agreed by the producer group, its oil minister told the state news agency on Sunday.
The comments followed the minister’s suggestion on Saturday that Iraq had made enough voluntary reductions and would not agree to any additional cuts proposed by the wider OPEC+ group at its June meeting.
OPEC+ has previously called out Iraq for pumping more than its output quota in the first three months of 2024. Baghdad agreed to compensate with additional production cuts over the rest of the year, the group said.