By Florence Tan and Siyi Liu
SINGAPORE (Reuters) – Oil prices rose on Monday as lower-than-expected U.S. inflation data raised hopes for further monetary easing, although expectations of excess supply next year weighed on the market.
Futures rose 36 cents, or 0.5 percent, to $73.30 a barrel by 0421 GMT. US West Texas Intermediate crude futures rose 39 cents, or 0.6%, to $69.85 per barrel.
“Risk assets, including US stock futures and crude oil, started the week on a firmer footing,” IG Markets Analyst Tony Sycamore said, adding that cool inflation data helped ease concerns following the Fed's hawkish interest rate cut.
“I think the US Senate passing legislation to end the short lockdown over the weekend helped,” he said.
Both benchmarks fell more than 2% last week due to concerns about global economic growth and demand for oil after the US central bank indicated caution about further easing in monetary policy. Research by Sinopec, Asia's largest (OTC:) refiner suggesting that China's oil consumption will peak in 2027, also weighed on prices.
Money managers raised net futures and options positions in the week ending December 17, the U.S. Commodity Futures Trading Commission (CFTC) said on Friday.
Concerns about European supplies eased after reports that the Druzhba pipeline, which transports Russian and Kazakh oil to Hungary, Slovakia, the Czech Republic and Germany, had resumed operation after it was halted on Thursday due to technical problems at a Russian pumping station.
Shipments resumed on Saturday, according to the Belarusian state news agency Belta. Hungarian Foreign Minister Peter Szijjártó said on Sunday that supplies from Druzhba to the country had resumed.
Before the stop, the pipeline was transporting 300,000 barrels per day of crude.
US President Donald Trump on Friday urged the European Union to increase US oil and gas imports or face tariffs on the bloc's exports.
The European Commission said it was ready to discuss with Trump how to strengthen what it described as an already strong relationship, including in the energy sector.
Trump also threatened to reassert US control of the Panama Canal on Sunday, accusing Panama of charging exorbitant prices for use of the Central American passage, drawing a sharp rebuke from Panamanian President Jose Raul Molino.
In the United States, the number of operating oil rigs rose to 483 last week, the highest level since last September. Baker Hughes (NASDAQ:) reported on Friday.
Analysts at Macquarie expect surplus supply to grow next year, which will pressure Brent prices to an average of $70.50 a barrel, from this year's average of $79.64 a barrel, they said in a December report.
