Oil prices hold steady as demand picks up and global business reopens

US-China tensions also kept prices above $33 per barrel

TAFT, CA - JULY 22:  Oil rigs just south of town extract crude for Chevron at sunrise on July 22, 2008 in Taft, California. Hemmed in by the richest oil fields in California, the oil town of 6,700 with a stagnant economy and little room to expand has hatched an ambitious plan to annex vast expanses of land reaching eastward to Interstate 5, 18 miles away, and taking over various poor unincorporated communities to triple its population to around 20,000. With the price as light sweet crude at record high prices, Chevron and other companies are scrambling to drill new wells and reopen old wells once considered unprofitable. The renewed profits for oil men of Kern County, where more than 75 percent of all the oil produced in California flows, do not directly translate increased revenue for Taft. The Taft town council wants to cash in on the new oil boom with increased tax revenues from a NASCAR track and future developments near the freeway.  In an earlier oil boom era, Taft was the site of the 1910 Lakeside Gusher, the biggest oil gusher ever seen in the US, which sent 100,000 barrels a day into a lake of crude.  (Photo by David McNew/Getty Images)

Oil started the trading week on a high note, continuing its recovery as US supply continued to decline.

Brent, the most widely traded crude commodity benchmark, was up 0.11 per cent at $35.17 per barrel, while West Texas Intermediate gained 0.63 per cent at $33.46 per cent at 3pm UAE time on Monday.

WTI crude consolidated its gains "as demand picks up on global business reopening and improved economic activity," said Ipek Ozkardeskaya, a senior analyst at Swissquote Bank.

"Though the US-China tensions could slow down the pace of the recovery, the improvement in basic energy demand should continue keeping the short-term trend on a positive path and give support to WTI near the $30 per barrel."

US oil prices recovered nearly 70 per cent from the beginning of this month, buoyed by slowing drilling activity across the US shale basins.

The US benchmark’s gains are a complete reversal of its performance last month, when it plunged below zero to -$40 per barrel towards the expiry of the May contract. The futures took a tumble as sellers found limited storage available to store their crude.

Supply also retreated further, as US drillers stopped production, even as Opec+ oil producers continued to cut back more than 9.7 million barrels per day in May and June.

Rig counts in the US, an indicator of upstream activity, slipped to the lowest levels since 2009, as shale independents continue to shut in production.

Rig count data from Baker Hughes indicated a fall by 21 to 237 for the week ending Friday.

US producers are in the process of halting 1.75m bpd of production by early June due to operating losses, lack of demand and storage capacity, noted IHS Markit.