Oil prices up on tight supply, tight supply support as Shanghai to reopen

MELBOURNE Reuters - Oil prices went up in early trade with U.S. fuel demand, tight supply, and a slightly weaker U.S. dollar supporting the market, as Shanghai prepares to reopen after a two-month lock down, which has caused worries about a slowdown in growth.

Brent crude futures rose by 82 cents to $113.37 a barrel at 0126 GMT, while U.S. West Texas Intermediate WTI crude futures climbed 69 cents, or 0.6%, to $110.97 a barrel, adding to last week's small gains for both contracts.

SPI Asset Management managing partner Stephen Innes said that oil prices are supported as gasoline markets remain tight despite strong demand heading into the peak U.S. driving season.

Refineries are typically in ramp-up mode to feed the unquenching thirst of the U.S. drivers at the pump. The peak driving season in the U.S. begins on Memorial Day weekend at the end of May and ends on Labor Day in September.

Mobility data from TomTom and Google showed that more people were on the roads in places like the United States despite fears about soaring fuel prices hurting demand, according to analysts.

In a note, ANZ analysts said that demand continues to grow as a result of high frequency data.

It made crude cheaper for buyers holding other currencies, as a result of a weaker U.S. dollar.

The market gains have been capped by concerns about China's efforts to crush COVID with lockdowns, even though Shanghai is due to reopen on June 1.

China, the world's top oil importer, has had hammered industrial output and construction, prompting moves to prop up the economy, including a bigger than expected mortgage rate cut last Friday.

The EU's inability to reach a final agreement on banning Russian oil for its invasion of Ukraine, which Moscow calls a special operation, has also stopped oil prices from climbing higher.