Oil prices rose on Tuesday as tight global supply outweighed worries that fuel demand would be hit by a possible recession and fresh COVID-19 curbs in China.
Brent crude futures rose 88 cents, or 0.7%, to $123.15 a barrel at 0824 GMT, while U.S. West Texas Intermediate (WTI) crude rose 88 cents, or 0.7% to $121.81 a barrel.
Tight supply has been aggravated by a drop in exports from Libya amid a political crisis that has hit output and ports.
Other OPEC+ producers are struggling to meet their production quotas and Russia faces bans on its oil over the war in Ukraine.
"The continuing squeeze on refined products globally, as well as a lack of investment to bring online more supplies from OPEC members, or other sources, means lost Russian production is nowhere near being covered by global markets," said Jeffrey Halley, senior market analyst at OANDA, in a note.
UBS raised its Brent price forecast to $130 a barrel for end-September and to $125 for the subsequent three quarters, up from $115 previously.
"Low oil inventories, dwindling spare capacity, and the risk of supply growth lagging demand growth over the coming months have prompted us to raise our oil price forecast," the bank said.
The market will be awaiting weekly U.S. inventory data from the American Petroleum Institute on Tuesday and the U.S. Energy Information Administration on Wednesday for a view of how tight crude and fuel supply remain.
Six analysts polled by Reuters expect U.S. crude inventories to have fallen by 1.2 million barrels in the week to June 3 with gasoline stockpiles up by about 800,000 barrels and distillate inventories, which include diesel and heating oil, unchanged.
On the demand side, China's latest COVID outbreak traced to a bar in Beijing has raised fears of a new phase of lockdowns just as restrictions in the country were being eased and fuel demand was expected to firm.
The Chinese capital's most populous district, Chaoyang, kicked off a three-day mass testing campaign among its roughly 3.5 million residents on Monday.
About 10,000 close contacts of the bar's patrons have been identified, and their residential buildings put under lockdown.]
Looking ahead, oil prices may face pressure if the U.S. Federal Reserve surprises markets with a higher-than-expected interest rate hike to tame inflation when it meets on June 14-15.
(Additional reporting by Sonali Paul and Isabel Kua in Singapore; editing by Jason Neely)
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
You’ve hit your limit of {{free_limit}} free articles this month.
Subscribe now for unlimited access.
Already subscribed? Log in
Subscribe to read the full story →
Quarterly Starter
₹900
3 Months
₹300/Month
Smart Essential
₹2,700
1 Year
₹225/Month
Super Saver
₹3,900
2 Years
₹162/Month
Renews automatically, cancel anytime
Here’s what’s included in our digital subscription plans
Access to Exclusive Premium Stories Online
Over 30 behind the paywall stories daily, handpicked by our editors for subscribers


Complimentary Access to The New York Times
News, Games, Cooking, Audio, Wirecutter & The Athletic
Business Standard Epaper
Digital replica of our daily newspaper — with options to read, save, and share


Curated Newsletters
Insights on markets, finance, politics, tech, and more delivered to your inbox
Market Analysis & Investment Insights
In-depth market analysis & insights with access to The Smart Investor


Archives
Repository of articles and publications dating back to 1997
Ad-free Reading
Uninterrupted reading experience with no advertisements


Seamless Access Across All Devices
Access Business Standard across devices — mobile, tablet, or PC, via web or app