Oil Prices Rise as Supply Fears Outweigh Macroeconomic Concerns

By 10:26 GMT, Brent crude was up 63 cents to $85.05 per barrel, while West Texas Intermediate crude was up 57 cents to $80.67 per barrel.

The tropical storm On Monday, Idalia slammed western Cuba and was nearly a hurricane as it entered Florida. The storm is expected to produce power outages and impact crude output on the eastern part of the United States Gulf Coast.

Last week, a chemical leak burned two massive storage tanks packed with volatile naphtha at a Marathon Petroleum (MPC.N) refinery, causing the jitters.

On Monday, the firm announced plans to restart units at the 596,000-bpd Garyville, Louisiana, refinery, the third largest in the US.

"Such incidents will remain catalysts in upward movement as the oil community is currently very sensitive to interruptions to any refinery, anywhere in the world," said John Evans of oil broker PVM.

Meanwhile, Chevron's (CVX.N) two major liquefied natural gas (LNG) production facilities in Australia, which account for more than 5% of global LNG capacity, could face daily work stoppages of up to 10 hours next week after unions threatened labor action over pay and conditions on Tuesday.

According to PVM's Evans, power markets will be a timely ally for a product-led oil rally.

Still, concerns about oil demand persist in the world's two largest economies, the United States and China.

Fed Chair Jerome Powell indicated on Friday that the US central bank may need to boost interest rates further to calm stubborn inflation.

Due to a worsening housing downturn, lackluster consumer spending, and plunging credit growth, China's post-pandemic economic recovery has stalled, prompting Beijing to slash key policy rates to boost activity in the world's largest oil importer.

Economic data from significant economies will also be scrutinized later this week to help determine the course of interest rates this year and next.

According to CMC Markets analyst Leon Li, "It may be difficult for oil prices to maintain the strong bull trend (seen) in July at this stage. The U.S. and European economies will face downward pressure in the fourth quarter until interest rates peak."