Crude prices dipped by less than 1% on Monday following a seven-week rally.
Concerns over China’s lackluster economic growth and a rising dollar put pressure on oil. West Texas Intermediate (CL=F) futures settled at $82.51 per barrel while Brent International (BZ=F) closed at $86.21.
The pullback is minor compared to oil’s recent moves. WTI and Brent futures are each up by about $15 per barrel since June 14.
Output cuts by the world’s largest oil producers have kept a floor on prices as supplies tighten. Oil deficits are currently estimated at about 2 million barrels per day this quarter, according to Bloomberg data.
"Deepening OPEC+ supply cuts have collided with improved macroeconomic sentiment and all-time high world oil demand," read a recent report by the International Energy Agency.
"World oil demand is scaling record highs," said the report.
"Oil dropped dramatically from over $80 to as low as $67 when the regional banking crisis hit, based on fears that it would trigger a recession. Oil has recovered as it has become clear that there is no imminent recession," Jay Hatfield, CEO at Infrastructure Capital Management in New York, said in an email to Yahoo Finance.
Goldman Sachs analysts recently reaffirmed their forecast of $93 per barrel for Brent crude and $86 per barrel for WTI by December, highlighting the market is less "pessimistic" about the global economy.
Energy-related stocks have been on an upward trend in the last two months. The S&P 500's Energy Select ETF (XLE) is up more than 2% year to date. The sector had been negative earlier this year amid recession concerns and a lagging economic recovery in China post COVID lockdowns.
"Right now, the world is ignoring the economic collapse in China and focusing on the economic recovery in the West," Louis Navellier of Navellier Capital Investments said in a recent note to investors.
"Seasonal demand for crude oil is expected to peak around Labor Day, so I will be monitoring inventories very carefully. If crude oil inventories remain low, it will be safe to continue to hold many refineries and integrated oil companies," he added.
Ines Ferre is a senior business reporter for Yahoo Finance. Follow her on Twitter at @ines_ferre.
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