Oil rises on expectations of OPEC supply cut and demand growth

Oil prices rose 1% on Monday as expectations that OPEC will cut production if necessary to support prices, conflicts in Libya and rising demand in Europe due to rising natural gas prices helped offset a poor outlook for US growth.

US West Texas Intermediate (WTI) crude futures rose 45 cents, or 0.48%, to $93.51 a barrel at 0632 GMT, adding to last week's 2.5% gain. Brent crude futures rose 16 cents, or 0.16%, to $101.15 a barrel, extending last week's 4.4% gain. "Oil prices are rising on hopes that OPEC and its allies will cut production to restore market balance in response to the revival of the Iran nuclear deal," said Sugandha Sachdeva, vice president of commodity research at Religare Broking. Sachdeva added that strong US oil exports and a larger-than-expected decline in oil inventories over the past few weeks have also eased some demand concerns amid fears of a slowdown. Both benchmarks traded lower earlier in the day as the dollar climbed after Federal Reserve Chairman Jerome Powell's harsh comments on Friday that the US faces a prolonged period of slow growth with further rate hikes. "While the strong dollar is limiting broad commodity prices, the supply shortage issue in oil markets will likely continue to support the upside," said Tina Teng, an analyst at CMC Markets. Oil prices rose on hints that Saudi Arabia and other members of the Organization of the Petroleum Exporting Countries and its allies, called OPEC+, may cut production to balance the market. A source told Reuters on Friday that the United Arab Emirates agreed with Saudi Arabia on production policy, while Oman's Oil Ministry said it supported OPEC+'s efforts to maintain market stability. Sources said last week that OPEC would consider cutting production to offset any increase from Iran in case oil sanctions are lifted if Tehran agrees to revive the nuclear deal. Violent clashes in the Libyan capital over the weekend that left 32 people dead have sparked concerns that the country could descend into full-blown conflict, leading to a disruption in crude supplies from the OPEC nation. "Also, rising gas prices will likely lead to a shift from gas to oil, which will continue to be a positive trigger for prices," Sachdeva said. Follow Global Economic Developments on Social Media! Click here to follow Ieconomy official Facebook account! Click here to follow Ieconomy official Instagram account! Click here to follow Ieconomy official Twitter account!