Oil prices rose to a three-month high on Monday as tighter supplies overshadowed concerns of an upcoming interest rate hike from the Federal Reserve later in the week.
West Texas Intermediate surpassed $78 per barrel as the previously-announced oil production cutbacks from OPEC+ began to take effect. The global oil supply has been delivered another blow following an outage at the Baton Rouge refinery resulting from the breakdown of a gasoline-making catalytic cracker. The machine may be out for several weeks.
Crude remains slightly down for the year, with China’s stalled economic recovery erasing the effects of OPEC+’s production cuts which include Russia and China. The Chinese government has indicated, however, that it intends to provide stimulus to boost the economy.
“Commentary out of China is disappointing to some markets, but the fact that we are seeing stimulus, if they do anything to support the economy, it’s positive for crude because I don’t think crude has priced in stimulus,” Rebecca Babin, a senior energy trader at CIBC Private Wealth observed.