Oil prices rose during trading on Monday, supported by a weak dollar and tight supply, which offset fears of a slowdown and the possibility that large-scale shutdowns in China (Covid-19) could dampen demand for the fuel again.
Brent crude for September delivery was up 4.3 percent at $105.60 a barrel by 14:49 GMT. US West Texas Intermediate crude futures for August delivery also rose 4.17 percent to $101.66 a barrel.
The US dollar retreated from multi-year highs on Monday, supporting commodity prices including gold and oil. A weaker dollar lowers the price of goods denominated in it for holders of other currencies.
Last week, Brent and West Texas Intermediate posted their biggest weekly declines in nearly a month amid fears of a slowdown affecting oil demand.
Mass testing for COVID-19 continued in parts of China this week, raising concerns about oil demand in the world’s second-largest consumer. However, oil supplies remain tight, supporting prices.
As expected, US President Joe Biden’s visit to Saudi Arabia did not elicit any commitment from the Organization of the Petroleum Exporting Countries (OPEC) largest producer to increase oil supplies. Biden wanted Gulf oil producers to increase production to offset high oil prices and lower inflation.
A senior U.S. energy security official said Sunday that major crude producers have spare production capacity and are likely to increase supplies after President Joe Biden’s visit to the Middle East.
“Based on what we’ve heard on the trip, I’m pretty sure we’ll see some more action in the coming weeks,” Amos Hochstein, the State Department’s senior adviser on energy security, told CBS’ “Face the Nation.” .” Hochstein did not say which country or countries would increase production and by how much.
Biden visited Saudi Arabia on Friday as part of his first trip to the Middle East as US president, hoping to seal a deal on oil production to lower the price of gasoline, which has risen to the highest level in more than 40 years. US inflation has risen and Biden’s approval rating has dropped in polls.
But he did not get any clear assurance on the increase in oil production. Saudi Foreign Minister Faisal bin Farhan did not address oil production at Saturday’s US-Arab summit. He pointed out that the OPEC Plus group led by Saudi Arabia will continue to assess market conditions and do the needful. The OPEC Plus Group, which also includes Russia, will meet on August 3rd.
Oil prices rose to their highest level since 2008, surpassing $139 a barrel in March, after the US and Europe imposed sanctions on Russia over what Moscow described as a “special military operation” in Ukraine. Since then the price has come down.
Hochstein also predicts gasoline prices in the U.S. will fall further toward $4 a gallon after breaking the five-dollar-a-gallon barrier this year for the first time in history.