US West Texas Intermediate crude futures rose to $111.51 a barrel, up $1.95, or 1.8%, from Friday’s close. Image Credit: Reuters

Melbourne: Oil prices rose 1 per cent in early trade on Tuesday, clawing back more of last week’s losses as the focus returned to tight supply of crude and fuel products versus concerns about a recession hitting demand down the track.

Brent crude futures rose $1.32, or 1.2 per cent, to $115.45 a barrel at 4.40am UAE, adding to a 0.9 per cent gain on Monday. The benchmark contract fell 7.3 per cent last week in its first weekly fall in five.

US West Texas Intermediate (WTI) crude futures rose to $111.51 a barrel, up $1.95, or 1.8 per cent, from Friday’s close.

There was no settlement on Monday, which was a US public holiday. WTI dropped 9.2 per cent last week.

Supply concerns are buoying the market, as Western sanctions on Russian oil bite and questions linger over how Russian output might fall due to sanctions on equipment needed for production, analysts said.

“The market remains cautious about disruptions to Russian oil as European sanctions kick in,” ANZ Research analysts said in a note.

The push and pull between supply concerns and uncertainty over global growth in the face of inflation and rising interest rates are likely to play out in the market for some time, analysts said.

“It’s a tension that we’re going to see unfolding for the rest of this year,” said Justin Smirk, senior economist at Westpac.

He said it is unclear how big a risk there is of demand destruction, given the global economy is still recovering from the COVID slump.

“There’s fear of a recession, but we’re not there. We’ve still got recovery coming through,” Smirk said.

Weekly US petroleum inventory data will be delayed by a day this week due to the Juneteenth holiday on Monday, with the American Petroleum Institute industry data for the week ending June 17 due on Wednesday and US Energy Information Administration data on Thursday.