Contrary to WTI decrease

World oil prices

Oil prices ended the first trading session of the week up by around $1. Oil prices reversed earlier losses as investors were optimistic that fuel demand in China - the world's largest oil importer - will be boosted during the upcoming holiday season in the East Asian country.

Brent crude for June delivery rose $1.07, or 1.3%, to $82.73 a barrel, while U.S. West Texas Intermediate (WTI) crude rose 89 cents, or 1.1%, to $78.76 a barrel.

Last week, both oil benchmarks fell more than 5%, marking the first weekly decline after four consecutive weeks of gains as U.S. gasoline demand fell from a year earlier and concerns about the global economy.

China’s bumpy economic recovery from the Covid-19 pandemic has clouded the outlook for oil demand, although Chinese customs data last Friday showed China imported a record amount of oil in March.

China’s outbound travel bookings for the upcoming Labor Day holiday show a continued recovery in tourist arrivals to Asian countries, Reuters reported, but they are still far from pre-coronavirus levels due to soaring long-haul airfares and a lack of flights to meet demand.

“There’s a lot of optimism around the Chinese holidays as it relates to jet fuel demand, the first solid numbers on Chinese demand,” said Bob Yawger, director of energy futures at Mizuho.

Tight supplies due to OPEC+'s plan to cut additional supplies from May could also push oil prices higher.

“The planned OPEC+ production cuts and the prospect of strong demand from China could support prices in the coming days,” said independent oil analyst Sugandha Sachdeva.

In another development, oil exports in northern Iraq showed positive signs of restarting after a month-long standstill.

Refining margins in Asia fell as record output from top refiners in China and India curbed the region’s demand for Middle East supplies in June.

Later this week, the US Federal Reserve will release its final key report on US employment, inflation and consumer spending ahead of its May policy meeting. In addition, some of the world's largest oil companies, including Chevron and Exxon, will report their first-quarter earnings on Friday.