The price of a barrel of crude oil increased by more than 1 percent on Monday, aided by the prospect of tightening supplies in Canada and elsewhere, although concerns of a recession continued to exert pressure on the market.
Brent crude futures settled at $75.23 per barrel, an increase of $1.06 or 1.4%, while US West Texas Intermediate (WTI) crude futures traded at $71.11 per barrel, an increase of $1.07 or 1.5%.
Alberta, Canada was ravaged by wildfires, which halted the supply of petroleum oil and caused prices to rise out of concern that the situation could worsen.
The production of at least 300,000 barrels of oil equivalent per day was halted in Alberta last week.
In 2016, wildfires halted production of more than one million barrels of oil equivalent per day.
Officials in Alberta anticipate continued scorching and arid weather conditions, which have caused an increase in wildfires and an increase in home evacuation orders, thereby causing disruptions.
This is due to the fact that the Organization of the Petroleum Exporting Countries and its allies, including Russia, plan to implement additional output limits in the second half of the year.
Analysts opined that the OPEC+ cuts will likely have a larger impact as the summer progresses, given that previous efforts to balance the markets were thwarted by seasonal weakness and the release of strategic reserves.
In addition, the United States could begin repurchasing oil for the Strategic Petroleum Reserve (SPR) after concluding a June sale mandated by Congress.
Fears of a global economic downturn limited oil price increases.
Oil benchmarks declined for the fourth week in a row, the longest stretch of weekly declines since September 2022, due to concerns of a US recession and the potential for a historic default on government debt in early June.
Ms. Jennifer Granholm informed legislators that her department could begin repurchasing oil for the SPR next month, following the completion of a congressionally mandated sale.
Last week, during a hearing in the US House of Representatives, Ms. Granholm told legislators that the congressionally mandated sale of 26 million barrels will be concluded by June, at which point the government will “flip the switch” and “seek to purchase.”
Last year, the Biden administration conducted the largest-ever sale of 180 million barrels from the SPR. This and other sales in the past year have reduced the reserve to approximately 372 million barrels, the lowest level since 1983.