Investing.com -- Oil prices rose Friday and were headed for strong gains in June as fears of supply disruptions in Russia and the Middle East largely offset concerns over slowing demand.
AT 07:55 ET (11:55 GMT), Brent oil futures rose 0.4% to $85.58 a barrel, while West Texas Intermediate crude futures rose 0.4% to $82.09 a barrel.
Crude set for June gains on supply fears
Both crude benchmarks were set to gain more than 6% each in June, as fears of a wider war between Israel and Lebanon’s Hezbollah kept markets on edge over disruptions in crude supplies.
Attacks by Ukraine on major Russian fuel refineries also pointed to potential disruptions in oil supplies from Moscow.
The geopolitical conflicts saw traders attach a higher risk premium to oil prices, and also pushed up the prospect of tighter markets in the coming months, due to disruptions in oil supplies.
Adverse weather conditions also pointed to more potential supply disruptions, following heavy rains in Ecuador and a potential hurricane in the Gulf Coast.
PCE data could influence sentiment
Also helping the tone has been growing confidence of an imminent Fed easing cycle, sparking a risk rally across most markets.
Traders are now pricing in a 64% chance of a first Fed cut in September, up from 50% a month ago, according to the CME FedWatch tool.
However, these expectations could be impacted by the release of U.S. personal consumption inflation data, the Fed's preferred measure of inflation, later in the session.
Saudi Arabia could cut Asia OSPs
On the flip side, Saudi Arabia may cut prices for crude grades it sells to Asia for a second month in August, Reuters reported Friday, tracking weakness in Middle East benchmark Dubai.
The potential price reduction for Asia, which accounts for about 80% of Saudi's oil exports, underscores the pressure faced by OPEC producers as non-OPEC supply continues to grow while the global economy faces headwinds.
The official selling price (OSP) for flagship Arab Light crude sold to Asia in August may fall by 60 cents to 80 cents a barrel from July, possibly to the lowest since April, according to a Reuters survey.
U.S. producers face probe over OPEC collusion
The U.S. Senate budget committee on Thursday launched a probe into 14 domestic producers, including Exxon Mobil (NYSE:XOM), Chevron (NYSE:CVX) and ConocoPhillips (NYSE:COP) over potentially coordinating with the Organization of Petroleum Exporting Countries in manipulating oil prices.
The OPEC cut production repeatedly over the past year to shore up oil prices, although the move had only provided limited support to crude markets.
But prices were buoyed by the cartel stating after a June meeting that it will maintain current levels of production to keep prices supported through 2024.
(Ambar Warrick contributed to this article.)