© Reuters. FILE PHOTO: Pump jacks operate at sunset in an oil field in Midland, Texas U.S. August 22, 2018. REUTERS/Nick Oxford
By Noah Browning
LONDON (Reuters) -Oil prices rose on Monday from an 8% drop last week on supply concerns, but was still trading near three-week lows, driven by worries that slower growth in major economies may limit fuel use.
futures rose 37 cents, or 0.5, to $80.31 a barrel at 1218 GMT, while U.S. West Texas Intermediate (WTI) crude futures slipped 13 cents or 0.2% to $73.52.
While recession fears dominated the market last week, prospects for China’s recovery after the relaxation of COVID-19 curbs there remains a driver for oil prices.
The International Energy Agency (IEA) expects half of global oil demand growth this year to come from China, its chief Fatih Birol said on Sunday, adding that jet fuel demand was surging.
Last Friday, WTI and Brent slid 3% after strong U.S. jobs data raised concerns the Federal Reserve would keep raising interest rates, which in turn boosted the dollar.
A stronger dollar typically reduces demand for dollar-denominated oil from buyers paying with other currencies.
Higher interest rates are checking price gains as they are likely to curtail economic growth and increases in fuel demand, analysts said.
“A resilient labor market could buttress households’ willingness and ability to continue consuming and therefore support corporate earnings and equities over the near term,” investment strategy firm BCA Research said in a note.
“However … a reacceleration of aggregate demand could lead to a second wave of inflation.”
Supply concerns continued to weigh on markets, however, as operations at Turkey’s oil terminal in Ceyhan halted after a major earthquake struck nearby early on Monday.
Also, price caps on Russian products took effect on Sunday, with the Group of Seven (G7), the European Union and Australia agreeing on price limits of $100 per barrel on diesel and other products that trade at a premium to crude, and $45 per barrel for products that trade at a discount such as fuel oil.