July 6, 2022

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Oil prices rise with a slight decline in the value of the dollar

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Oil prices rose in early trade on Monday as US fuel demand, tight supplies and a slight fall in the dollar supported the market, with Shanghai preparing to reopen after a two-month shutdown, raising concerns about a sharp slowdown in growth.

Brent crude was up 82 cents at $ 113.37 a barrel at 0126 GMT, while the US West Texas Intermediate crude futures were up 69 cents, or 0.6 percent, at $ 110.97 a barrel, adding to last week’s minor gains.

“Oil prices are supported as petrol markets tighten amid strong demand during the US driving season,” said Stephen Innes, managing partner at SBI Asset Management.

“Refineries will generally be a ramp-up system at gas stations to meet the great needs of American drivers,” he added.

The peak driving season in the United States traditionally begins on Memorial Day weekend in May and ends on Labor Day in September.

Despite concerns that higher fuel prices could cut demand, analysts say mobility data provided by TomTom and Google have increased in recent weeks, indicating that more people are on the road in places like the United States.

“High-frequency data suggest that demand continues to grow,” ANZ analysts said in a statement.

The fall in the US dollar pushed up oil prices on Monday as crude oil became cheaper for buyers of other currencies.

However, when Shanghai reopened on June 1, market gains were curtailed by concerns over China’s efforts to combat the Govt epidemic through locks.

The strike by China, the world’s largest oil importer, has hit industrial production and construction, prompting measures to support the economy, including a larger-than-expected mortgage rate cut last Friday.

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The failure of the European Union to reach a final agreement on Russia’s oil embargo prevented oil prices from rising further.

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