Oil prices jump on soft dollar, tight supplies support

18 Jul Oil prices jump on soft dollar, tight supplies support

Oil prices extended gains on Monday on a weaker dollar and tight supplies that offset concerns about recession and the prospect of widespread COVID-19 lockdowns in China again reducing fuel demand.

Brent crude futures for September settlement rose $2.44, or 2.4%, to $103.60 a barrel by 0900 GMT, having advanced by 2.1% on Friday.

U.S. West Texas Intermediate (WTI) crude futures for August delivery gained $2.17, or 2.2%, to $99.76 after rising by 1.9% in the previous session.

Last week, Brent and WTI posted their biggest weekly drops in about a month on fears of a recession that will hit oil demand. Mass COVID testing exercises continued in parts of China this week, raising oil demand concerns at the world’s second-largest oil consumer.

However, oil supplies remained tight, supporting prices. As expected, U.S. President Joe Biden’s trip to Saudi Arabia failed to yield any pledge from the top OPEC producer to boost oil supply.

Biden wants Gulf oil producers to step up output to help tame oil prices and drive down inflation.

The next meeting of the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, together called OPEC+, on Aug. 3 will be closely watched as their existing output pact expires in September.

Global markets are focused this week on the resumption of Russian gas flows to Europe via the Nord Stream 1 pipeline which is scheduled to end maintenance on July 21. Governments, markets and companies fear the shutdown may be extended because of the war in Ukraine.