Geopolitical tensions and OPEC+ supply cuts supported oil, which fell slightly on Monday as concerns about longer-term interest rates resurfaced and lifted the dollar.
Brent crude futures were down 3 cents to $85.21 a barrel by 0632 GMT after falling 0.6% on Friday. WTI futures were down 2 cents to $80.71 a barrel.
The U.S. dollar appeared to have risen further on Friday night after better U.S. PMI data and political concerns ahead of the French election. A stronger dollar makes dollar-denominated commodities less attractive to holders of other currencies.
The dollar index, which measures the value of the greenback against a basket of six major currencies, rose on Friday and edged higher on Monday after data from the purchasing managers index showed U.S. business activity hit a 26-month peak in June.
However, both benchmark crude contracts gained about 3% last week on signs of strengthening demand for oil products in the United States, the world’s largest consumer, and as OPEC+ cuts kept supply in check.
U.S. crude inventories fell, gasoline demand rose for a seventh straight week and jet fuel consumption returned to 2019 levels, analysts said. They added that speculators had become more constructive about oil during the summer months and increased their net long positions in ICE Brent.
The third-quarter deficit is expected to tighten the oil balance, while the oil market continues to be supported.
Geopolitical risks in the Middle East stemming from the Gaza crisis and the surge in Ukrainian drone attacks on Russian refineries also supported oil prices.
Ecuador on Friday declared force majeure on Napo heavy crude deliveries for export after state oil company Petroecuador shut down a key pipeline and oil wells due to heavy rainfall.
The number of oil rigs operating in the U.S. fell by three last week to 485, the lowest level since January 2022, Baker Hughes said in a report on Friday.
