2% Increase In Oil Prices As US Dollar Drops
2% Increase In Oil Prices As US Dollar Drops
Concerns over supply and a decline in the US dollar drove up oil prices by nearly 2% on Monday, with the Brent crude price jumping by $1.95 per barrel to $105.15 and the US West Texas Intermediate (WTI) surging by $2 or 2.1% to close at $96.70.
Oil futures have been erratic recently, backed by a restricted supply and pressured by concerns that rising interest rates will slow economic development and reduce fuel demand growth, particularly in the wake of Russia’s invasion of Ukraine and Western sanctions against Moscow.
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The US dollar’s small decline helped the commodity as it allowed holders of other currencies to purchase more.
Support also came from China, the second-biggest economy and the world’s largest oil exporter, which avoided a decline in the second quarter of 2022 by expanding by just 0.4% year over year.
Prices benefited amid expectations that Russian oil supply will gradually decline in the coming months due to widely anticipated plans for a price cap on Russian oil. However, the country resisted the idea, stating that it would not supply oil to nations that did so.
2% Increase In Oil Prices As US Dollar Drops
In accordance with a modification of sanctions adopted by member states last week with the goal of reducing the threats to global energy security, the European Union (EU) announced last week that it would permit Russian state-owned firms to ship oil to other nations.
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Although the US and European economies are faltering, traders are disregarding caution as the US Federal Reserve is expected to hike interest rates once again this week.
At its July meeting, which starts on Tuesday, the US central bank is expected to likely increase rates by 75 basis points.
In terms of supply, Libya’s National Oil Corporation (NOC) stated that it expected to increase production from about 860,000 barrels per day to 1.2 million barrels per day in two weeks.
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Analysts anticipate a volatile output from Libya though as tensions remained high following clashes between opposing political factions over the weekend. This is a continuation of a pattern that has resulted in blockades of oil fields and export terminals, which has resulted in the forced shutdown of much of the country’s production capacity.
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