Oil futures bounced back from steep losses to end higher Monday, with the U.S. benchmark holding support near the $100-a-barrel threshold.
West Texas Intermediate crude for June delivery
rose 48 cents, or 0.5%, to close at $105.17 a barrel on the New York Mercantile Exchange, after trading as low as $100.28.
The market “continues to see fundamental support from a tight supply situation, which thas prevented any prolonged dip below $100/bbl (barrel) in recent trading,” said Robbie Fraser, manager, global research and analytics at Schneider Electric, in a note.
“With Russian exports expected to struggle going forward — a situation that has already triggered reduced production — that support should be a strong counterbalance to any demand fears for now,” he wrote.
Oil fell in early activity after data over the weekend showed China’s manufacturing activity dropped to a six-month low in April as lockdowns continued in Shanghai and other manufacturing hubs amid an attempt to stem COVID-19 outbreaks. The monthly purchasing managers’ index, released by China’s National Bureau of Statistics, fell to 47.4 in April, down from 49.5 in March on a 100-point scale. Numbers below 50 show activity contracting.
Oil had seen choppy trading in overseas market hours, with underlying support tied to developments last week that saw the European Union moving toward a ban on imports of Russian crude after Germany appeared to drop its opposition to such a move. German Economy and Climate Minister Robert Habeck said Sunday that Europe’s largest economy has reduced the share of Russian energy imports to 12% for oil, 8% for coal and 35% for natural gas.
The fluctuation in crude prices “is a speeded-up version of what has been happening over the past few weeks, which have seen days of gains and losses alternating almost like clockwork,” said Carsten Fritsch, commodity analyst at Commerzbank, in a note.