New York — Oil prices were little changed on Monday as investors shrugged off fears of a global economic slowdown and focused on the prospect of tighter supply and lower U.S. crude inventories ahead.
Brent crude oil futures climbed 30 cents to $67.33 a barrel by 11:56 a.m. EST (1556 GMT), while U.S. West Texas Intermediate (WTI) futures rose 11 cents to $59.15 a barrel.
Crude oil pared earlier losses as the U.S. stock market turned positive.
“The oil market was worried about a global recession, and now we’re kind of shaking that off and thinking that if the U.S. stock market can turn higher, maybe things aren’t so bad,” said Phil Flynn, an analyst at Price Futures Group in Chicago.
“Now we’re focusing on (oil) inventories … and people aren’t going to want to be short into the inventory report, which is probably going to show another big drawdown.”
Weekly figures on U.S. oil data from the American Petroleum Institute (API), an industry group, will be released on Tuesday, followed by the official Energy Information Administration (EIA) figures on Wednesday.
U.S. crude inventories have drawn down for two straight weeks, slumping nearly 10 million barrels in the latest EIA report.
Oil prices took a hit on Friday after cautious remarks by the U.S. Federal Reserve caused 10-year treasury notes to slip below three-month yields for the first time since 2007, sparking fears of a recession in the world’s largest economy.
Historically, an inverted yield curve, where long-term rates fall below short-term ones, has pointed to an upcoming recession.
Chicago Federal Reserve Bank President Charles Evans on Monday said it was understandable for markets to be nervous when the yield curve flattens, but he was still confident about the U.S. economic growth outlook.
An improved index on Germany’s business climate dispelled some recession concerns that flared after manufacturing output data from Europe’s biggest economy shrank for the third straight month.
Ongoing supply cuts by the Organization of the Petroleum Exporting Countries and allies such as Russia, known as OPEC+, also supported prices. OPEC’s de-facto leader, Saudi Arabia, appears to be pushing for a Brent crude price of over $70 per barrel.
“Oil supply fundamentals remain price-constructive with OPEC+ collectively making good progress on pledged supply cuts,” BNP Paribas strategist Harry Tchilinguirian told the Reuters Global Oil Forum.
Commerzbank noted declines in U.S. crude stocks and expenditure by U.S. shale firms were also providing support.
“Oil market-specific reports, which point to tighter supply, are preventing prices from falling any more sharply.”