By Stephanie Kelly
NEW YORK (Reuters) -Oil prices rose over 1% on Monday, buoyed by optimism over Chinese demand, continued production curbs by major producers and Russia's plans to rein in supply.
Brent crude settled up $1.07, or 1.3%, at $84.07 a barrel. U.S. West Texas Intermediate crude (WTI) for March, which expires on Tuesday, last rose 85 cents, or 1.1%, at $77.19.
Volumes were muted on Monday because of a U.S. market holiday for Presidents' Day.
Both crude benchmarks settled $2 lower on Friday for a decline of about 4% over the week after the United States reported higher crude and gasoline inventories.
Analysts expect China's oil imports to hit a record high in 2023 to meet increased demand for transportation fuel and as new refineries come on stream.
"The optimism around China today may be responsible for the gains we're seeing in crude, which would make a lot of sense given it's the world's largest importer and expected to recover strongly from the COVID transition," said Craig Erlam, senior markets analyst at OANDA in London.
China and India have become major buyers of Russian crude amid Western sanctions on Russian oil and more recently, embargoes and price caps because of the Ukraine war.
In India, the world's third-biggest oil importer, crude imports rose to a six-month high in January, government data showed.
China's commerce ministry has met independent oil refiners to discuss their deals with Russia, five sources with knowledge of the matter said, imports which have saved Chinese buyers billions of dollars.
"The government wants to understand how much independent refiners could possibly buy and their actual appetite for such imports," said one source with direct knowledge of the discussions.
Russia plans to cut oil production by 500,000 barrels per day (bpd), equating to about 5% of its output, in March after the West imposed price caps on Russian oil and oil products.
Russia is part of the OPEC+ producer group comprising the Organization of the Petroleum Exporting Countries (OPEC) and allies, which agreed in October to cut oil production targets by 2 million bpd until the end of 2023.
Future oil supply shortages are likely to drive prices toward $100 a barrel by the end of the year, Goldman Sachs (NYSE:GS) analysts said in a Feb. 19 note.
Prices will move higher "as the market pivots back to deficit with underinvestment, shale constraints and OPEC discipline ensuring supply does not meet demand", they wrote.