On Monday, oil prices continued to rise, supported by a lower currency and limited supply that countered worries about the economy and the possibility of widespread COVID-19 lockdowns in China, decreasing fuel demand.
After increasing by 2.1 percent on Friday, Brent oil futures for September settlement increased by $2.44, or 2.4 percent, to $103.60 a barrel at 0900 GMT. After advancing by 1.9 percent in the previous session, U.S. West Texas Intermediate (WTI) crude futures for August delivery increased by $2.17, or 2.2 percent, to $99.76.
On Monday, the U.S. dollar declined from multi-year highs, helping to maintain the prices of commodities like gold and oil. Dollar-denominated goods are cheaper for owners of other currencies when the dollar is lower. Fears of a recession affecting oil consumption led to the largest weekly drops in both Brent and WTI last week. This week, widespread COVID testing activities have continued in several regions of China, raising concerns about the country’s oil consumption as the second-largest oil user in the world.
Oil supplies, meanwhile, are still limited. To cut oil costs and combat inflation, Biden wants Gulf oil companies to increase production.
This week, the attention of the world’s financial markets is on the restart of Russian gas exports to Europe through the Nord Stream 1 pipeline, which will come out of maintenance on July 21. Governments, markets, and businesses worry that the closure will last longer due to the conflict in Ukraine.
According to Jeffrey Halley, senior analyst at OANDA, “Brent crude will find support towards the end of the week if Russia does not switch the gas back on to Germany following Nord Stream 1 repair.”
Germany, the fourth-largest economy in the world, would suffer greatly from the loss of that gas, increasing the likelihood of a recession.
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Chinese EconomyCommodity PricesCOVID-19 PandemicEconomic SlowdownGlobal EconomyInflationOil Prices