Oil prices edge higher; growth worries limit gains

Oil prices rose from an 8% drop last week on supply concerns, but was still trading near three-week lows, driven by worries that slower growth in major economies may limit fuel use.

Brent crude futures rose 26 cents, or 0.33%, to $80.20 a barrel, while U.S. West Texas Intermediate (WTI) crude futures gained 8 cents or 0.11% to $73.47.

While recession fears dominated the market last week, prospects for China’s recovery after the relaxation of COVID-19 curbs there remains a driver for oil prices.

The International Energy Agency (IEA) expects half of global oil demand growth this year to come from China, its chief Fatih Birol said on Sunday, adding that jet fuel demand was surging.

Last Friday, WTI and Brent slid 3% after strong U.S. jobs data raised concerns the Federal Reserve would keep raising interest rates, which in turn boosted the dollar.

A stronger dollar typically reduces demand for dollar-denominated oil from buyers paying with other currencies.

Higher interest rates are checking price gains as they are likely to curtail economic growth and increases in fuel demand, analysts said.

Supply concerns continued to weigh on markets, however, as operations at Turkey’s oil terminal in Ceyhan halted after a major earthquake struck nearby early on Monday.

Also, price caps on Russian products took effect on Sunday, with the Group of Seven (G7), the European Union and Australia agreeing on price limits of $100 per barrel on diesel and other products that trade at a premium to crude, and $45 per barrel for products that trade at a discount such as fuel oil.