Oil headed for a modest weekly gain as futures stayed in a narrow range, with the outlook for supply and inflation in focus.

West Texas Intermediate traded above US$79 a barrel, putting U.S. benchmark crude on track for a weekly gain of more than one per cent that would be its third advance in four weeks. Lower U.S. crude stockpiles and a sign that inflation could be ebbing have provided a lift to prices this week. However, they’ve had to vie in recent sessions with bearish forces such as an International Energy Agency outlook for weaker demand growth.

Although the market has shed much of its geopolitical risk premium over the past few weeks, traders got a strong reminder that threats remain after Ukrainian drones set Russia’s Tuapse refinery on fire. The facility has already been offline for three months this year following a previous strike.

Price action this week has been muted as the competing drivers largely offset each other. The conflicting factors resulted in a tight weekly range, with Brent volatility falling to the lowest since March. Traders are awaiting the next big catalyst in the oil market, and many expect to find it in the net OPEC+ meeting on June 1.

The group is widely expected to continue with existing production cuts, with some members seeking to have their capacity levels upgraded.

Prices:

• WTI for June delivery rose 0.2 per cent to $79.36 a barrel at 10:48 a.m. in New York.
• Brent for July settlement advanced 0.2 per cent to $83.41 a barrel.