Oil prices closed higher on Monday, shrugging off expectations of weak demand as supply concerns grow as winter approaches.
The international benchmark Brent crude contracts ended the trading session with a rise of $1.16, or 1.3 percent, to record at the settlement of $94.00 a barrel.
US West Texas Intermediate crude contracts rose 99 cents, or 1.1 percent, to settle at $87.78 a barrel.
Data from the US Energy Department showed on Monday that crude stocks in emergency reserves fell 8.4 million barrels to 434.1 million barrels in the week to September 9, the lowest level since October 1984.
Further tightening of global oil supply is expected when an EU embargo on Russian oil takes effect on Dec. 5.
The Group of Seven major industrialized nations will implement a Russian oil price cap to limit the country’s crude export revenues, seeking to punish Moscow for its invasion of Ukraine while taking measures to ensure the flow of crude to developing countries continues.
But the US Treasury has warned that the cap could send US oil and gasoline prices to even higher levels this winter.
On Wednesday, the European Commission is expected to unveil a package of measures to help electricity companies facing a liquidity crisis.
France, Britain and Germany said on Saturday they had “serious doubts” about Iran’s intentions to revive the 2015 nuclear deal. Failure to revive that agreement will keep Iranian crude out of the market and in tight global supply.
China’s demand for oil may contract for the first time in two decades this year, as Beijing’s zero-Covid policy to completely eradicate the Corona virus keeps people indoors during the holidays and reduces fuel consumption.
“Continued headwinds due to China’s renewed virus restrictions and more moderation in global economic activities may raise some reservations about a more sustainable price rally,” said Jun Rong Yip, market strategist at AG.
Meanwhile, the European Central Bank and the US Federal Reserve are preparing to raise interest rates further to curb inflation, which could raise the value of the US dollar against other currencies and make green-denominated oil more expensive for investors.