Oil prices rose on Monday as weaker-than-expected U.S. inflation data revived hopes for further policy easing, although the prospect of a supply surplus next year weighed on the market.
Brent crude was up 36 cents, or 0.5%, at $73.30 a barrel by 0421 GMT. U.S. West Texas Intermediate crude was up 39 cents, or 0.6%, at $69.85 a barrel.
"Risk assets, including U.S. equities and crude, have started the week on a firmer footing," said IG market analyst Tony Sycamore, adding that cooler inflation data helped ease concerns after the Federal Reserve's aggressive interest rate cuts.
"I think the U.S. Senate passing legislation to end the short-lived shutdown over the weekend has helped," he said.
Both oil benchmarks fell more than 2% last week on concerns about global economic growth and oil demand after the U.S. central bank signaled caution over further monetary policy easing. Research from Asia's top oil refiner Sinopec (OTC:SHIIY) showed that China's oil consumption will peak in 2027, which also weighed on prices.
Money managers raised their net-long positions in U.S. crude futures and options in the week to Dec. 17, the U.S. Commodity Futures Trading Commission (CFTC) said on Friday.
Concerns about European supplies eased after reports that the Druzhba pipeline, which carries Russian and Kazakh oil to Hungary, Slovakia, the Czech Republic and Germany, had restarted after being halted on Thursday due to technical problems at a Russian pumping station.
Shipments resumed on Saturday, according to Belarusian state news agency BelTa. On Sunday, Hungarian Foreign Minister Peter Szijjarto said Druzbha supplies to the country had resumed.
Before the shutdown, the pipeline was carrying 300,000 barrels of crude oil per day.
U.S. President Donald Trump on Friday urged the European Union to increase imports of U.S. oil and gas 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 U.S. control of the Panama Canal on Sunday, accusing Panama of charging excessive tariffs to use the Central American waterway and drawing a sharp rebuke from Panamanian President Jose Raul Mulino.
In the U.S., the number of operating oil rigs rose by one to 483 last week, the highest since September, Baker Hughes (NASDAQ:BKR) reported on Friday.
Macquarie analysts expect a widening supply surplus next year, which would push 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.
Source: Investing.com
