US dollar breaks multi-week streak, boosts oil prices on tighter supplies
ALBAWABA – Oil prices rose Monday for a third day in a row as the market tightens and the United States (US) dollar stalled, offsetting demand risks in China and the US, news agencies reported.
Brent crude climbed $0.61 cents to $85.41 a barrel by 0649 GMT, according to Reuters, while West Texas Intermediate (WTI) crude traded at $81.88 a barrel, up $0.63 cents.
The September WTI contract expires on Tuesday and the more active October contract gained $0.56 cents on the barrel, trading at $81.22.
The dollar was steady Monday following declines in the previous two sessions, making commodities that are priced in the currency cheaper for many buyers, Bloomberg reported.
The greenback broke a multi-week winning streak over the pact few sessions, having been gaining since mid-July.
Oil prices typically move inversely in relation to the US dollar, Reuters highlighted, as the the stall in the dollar rally over aided oil prices, market strategist at IG Asia Pte Yeap Jun Rong told Bloomberg.
“All eyes will be on whether China will be able to pull off a recovery through the rest of the year to provide further conviction for oil prices to continue higher,” Yeap said.
Front-month oil prices for both benchmarks snapped a seven-week winning streak last week to post a weekly loss of 2 percent after the US dollar surged on the possibility that interest rates could remain higher for longer, Bloomberg explained. Especially with China's property crisis adding to concerns about its sluggish economic growth and oil demand.
Oil prices rise on supply concerns
Still, China oil imports have hit the highest levels in 2023 for years, with imports from Iran expected to hit a multi-year record in the coming weeks.
"We still see a tight oil balance for the remainder of the year, which suggests that prices still have some room to run higher," ING's head of commodities research Warren Patterson told Reuters.
On the supply side, crude exports by members of the Organization of Petroleum Exporting Countries and its allies, including Russia, referred to as OPEC+, will likely see more cuts.
OPEC+ crude exports are set to fall a second month in August, Stefano Grasso, a senior portfolio manager at 8VantEdge in Singapore, told Reuters, citing preliminary data from shiptracking firm Kpler.
Saudi Arabia had already announced its readiness to do whatever is necessary to bolster oil prices.
Meanwhile, some refined products such as diesel — the workhorse fuel of the global economy — have started pricing in scarcity this winter, boosting their premium to the oil from which they are made, according to Bloomberg. Gasoline futures in New York have risen by 15 percent this year, also outpacing crude.
