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The price of oil is rising due to market fears over supply

Image: Reuters Berita 24 English -   Oil prices gained 1% in early trade on Tuesday, recouping some of last week's losses as the focus ...

Image: Reuters

Berita 24 English -  Oil prices gained 1% in early trade on Tuesday, recouping some of last week's losses as the focus shifted back to tight crude and fuel product supplies vs fears about demand being hurt by a recession in the future.

Brent crude futures were up $1.32, or 1.2 percent, at $115.45 per barrel at 0040 GMT, following a 0.9 percent gain the day before. Last week, the benchmark contract plummeted 7.3 percent, the first weekly drop in five weeks.

WTI crude futures in the United States increased to $111.51 per barrel, up $1.95, or 1.8 percent, from Friday's closing. There was no agreement on Monday, which was a federal holiday in the United States. Last week, WTI fell 9.2 percent.

Analysts say supply fears are boosting the market as Western sanctions on Russian oil bite and questions linger about how Russian output would decline as a result of penalties on production equipment.

"As European sanctions kick in, the market remains apprehensive about disruptions to Russian oil," ANZ Research analysts wrote in a note.

According to economists, the market's push and pull between supply concerns and global growth uncertainties in the face of inflation and rising interest rates will certainly continue for some time.

"We'll see this tension play out for the remainder of the year," said Justin Smirk, a senior economist at Westpac.

Given that the world economy is still recovering from the COVID recession, he said it's uncertain how serious the risk of demand destruction is.

"There is concern about a recession, but we are not yet in one. We're still on our way to recuperation "Smirk said.

Due to the Juneteenth holiday on Monday, weekly U.S. petroleum inventory data will be delayed by one day this week, with the American Petroleum Institute industry data for the week ending June 17 coming on Wednesday and the U.S. Energy Information Administration data due on Thursday.

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