By Barani Krishnan
Investing.com -- Crude markets rallied on Monday on speculation that the predominantly-Western Group of Seven (G7) nations might further tighten the flow of oil to their shores in a move to abandon Russian supplies.
Russia, meanwhile, staged its biggest attack in months on Ukrainian civilians, reportedly killing as many as 1,000 of them after firing rockets at a mall in Kremenchuk.
The prospect of oil being further constricted into the West loomed as leaders of the G7 — made up of Canada, France, Germany, Italy, Japan, the United Kingdom and the United States — discussed at their meeting in Bavaria, Germany, ways to cut Russia’s ability to fund its war in Ukraine. US President Joe Biden is to meet Germany’s Chancellor Olaf Scholz, France’s President Emmanuel Macron and UK's Prime Minister Boris Johnson on June 28th on the margins of the G7 summit.
New York-traded West Texas Intermediate, the benchmark for U.S. crude, settled up $1.95, or 1.8%, at $109.57 per barrel.
London-traded Brent crude, the global benchmark for oil, settled up $1.97, or 1.7%, at $115.09.
“There are numerous geopolitical chess pieces being moved around the board that are supporting oil, though the play could shift the other way any moment,” said John Kilduff, partner at New York energy hedge fund Again Capital.
Members of the Organization of the Petroleum Exporting Countries and their allies including Russia, known as OPEC+, will put out 50% more oil in July than in June.
But the 23-nation alliance, led by Saudi Arabia and supported by Russia, also trimmed its projected 2022 oil market surplus to 1 million barrels per day from a previous estimate of 1.4 million, according to an internal report seen by Reuters.
Crude prices were down earlier in the day on reports that G7 was also discussing prospects of reviving stalled nuclear talks with Iran in an effort to find a workaround to the crisis caused by the sanctions on Russian oil.
Some investors in oil also appeared hesitant to put on major positions after the U.S. Energy Information Administration said its weekly inventory report will be delayed for a second straight week due to server issues.
The EIA’s globally-followed Weekly Petroleum Status Report missed publication on June 24 and will not be released again as slated on June 29. The agency, however, said all its data was intact and it will resume publication “as soon as possible.”
The EIA however reported separately that it released 6.9 million barrels of crude from the U.S. Strategic Petroleum Reserve last week as it relied on the emergency reserve to bridge the supply tightness that has sent domestic gasoline prices to all-time highs above $5 per gallon.
The latest release pushed the SPR inventory level below the 500 million barrel mark for the first time since 1986, Bloomberg reported.