Crude oil futures staged a rebound on Monday, following heightened geopolitical tensions stemming from the ongoing Russia-Ukraine conflict.
Ukraineโs recent drone strikes on Russian air bases have introduced a renewed element of supply risk into the market.
This geopolitical backdrop provided an offset to the news that OPEC+ would raise production by 411,000 barrels per day in July, a move widely anticipated and already priced in by traders.
Meanwhile, lower U.S. fuel inventories coupled with a surge in gasoline demand ahead of the peak summer driving season have added further supply-side support.
On the demand front, however, Asian crude imports, especially from China, have softened recently, pointing to a degree of caution in the face of persistent economic uncertainty. These opposing forces could leave prices range-bound and susceptible to volatility.
Looking forward, geopolitical risks related to the Russia-Ukraine conflict are likely to maintain a risk premium in oil markets, providing support to prices. The outlook remains clouded by concerns over slower demand growth caused by global trade tensions and economic headwinds. As a result, traders could react to US and Chinese economic data as well as crude inventory data this week.
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