Oil prices rose 1% on Tuesday, clawing back more of last week's losses as investors focused on tight supplies of crude and fuel products rather than concerns about a recession dampening demand going forward.
Brent crude futures rose $1.08, or about 1%, to $115.21 a barrel at 0400 GMT, adding to a 0.9% gain on Monday. The benchmark contract fell 7.3% last week in its first weekly fall in five.
U.S. West Texas Intermediate (WTI) crude futures for July, which expires later on Tuesday, rose to $112.01 a barrel, up $2.45, or 2.2%, from Friday's close. There was no settlement on Monday, which was a U.S. public holiday. WTI dropped 9.2% last week.
The more-active WTI contract for August was up $2.12 at $110.11 a barrel.
"After getting hammered into the U.S. long weekend due to recession and fuel demand destruction concerns, oil prices are rallying again," said Stephen Innes, managing partner at SPI Asset Management.
"Those global economic worries are seemingly offset by prospects for higher U.S. and China demand in the near term amid tight prompt supplies."
Supply concerns are buoying the market, as Western sanctions on Russian oil bite and questions linger over how Russian output might fall due to sanctions on equipment needed for production, analysts said.
"Traders are assessing the tight supply and a slowdown in the global economic growth, leading to the volatile sessions," said Tina Teng, an analyst at CMC Markets.
"However, the recession concerns may become a major bearish factor of the crude markets for the rest of the month."
The push and pull between supply concerns and uncertainty over global growth are likely to play out in the market for some time, analysts said.
"It's a tension that we're going to see unfolding for the rest of this year," said Justin Smirk, senior economist at Westpac.
He said it is unclear how big a risk there is of demand destruction, given the global economy is still recovering from the COVID slump.
"There's fear of a recession, but we're not there. We've still got recovery coming through," Smirk said.
Weekly U.S. petroleum inventory data will be delayed by a day this week due to the Juneteenth holiday on Monday, with the American Petroleum Institute industry data for the week ending June 17 due on Wednesday and U.S. Energy Information Administration data on Thursday.
