Oil prices continued to rise on Monday, helped by a weaker dollar and limited inventories, which offset recession fears and the prospect of widespread COVID-19 lockdowns in China, once again dampening fuel demand.
Brent futures for September delivery rose $2.54, or 2.5%, to $103.70 a barrel after rising 2.1% on Friday.
U.S. West Texas Intermediate (WTI) crude for August delivery rose $2.31, or 2.4%, to $99.90 a barrel, after rising 1.9% in the prior session.
Last week, Brent and WTI recorded their biggest weekly drop in about a month due to fears of a recession that would hit oil demand. Massive COVID testing exercises continued in parts of China this week, raising concerns about oil demand from the world’s second-biggest oil consumer. read more
However, oil supplies remained limited, which supported prices. As expected, US President Joe Biden’s trip to Saudi Arabia did not result in any promises from top oil producer OPEC to increase oil supply. read more
Biden wants oil producers in the Persian Gulf to increase production in order to lower oil prices and reduce inflation.
On Sunday, Amos Hochstein, the US State Department’s senior energy security adviser, told CBS’s “Face the Nation” that the trip would see oil producers take “a few more steps” in terms of supply, though he didn’t say when. country or countries will increase production.
“While there have been no immediate promises to increase oil production, the US has reportedly indicated an expected gradual increase in production,” Baden Moore, head of commodity research at the National Australian Bank, said in a note.
“The reduction in SPR issuances since November could offset this increase in supply, albeit by no more than 1 million barrels a day.”
The next meeting of the Organization of the Petroleum Exporting Countries (OPEC) and allies, including Russia, collectively known as OPEC+, on August 3, will come under scrutiny as their current production agreement expires in September.
This week, global markets are focused on the resumption of Russian gas supplies to Europe via the Nord Stream 1 gas pipeline, the repair of which is due to be completed on July 21. Governments, markets and companies fear the shutdown could be extended due to the war in Ukraine. read more
The loss of this gas would hit Germany, the world’s fourth-largest economy, hard and increase the threat of a recession.
Separately, US Treasury Secretary Janet Yellen said Saturday that she had productive meetings on the proposed cap on Russian oil prices with a range of countries on the sidelines of the Group of 20 CFO meeting.
Yellen floated the price cap idea during a July 5 virtual meeting with Chinese Vice Premier Liu He, China’s Commerce Ministry said last week.
The ministry said capping the price of Russian oil is “a very complex issue” and a precondition for resolving the Ukrainian crisis is to promote peace talks between the parties concerned. read more