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Oil prices snap seven-day losing streak, helped by weaker dollar

US Rep. Ilhan Omar (D-MN) (L) talks with Speaker of the House Nancy Pelosi (D-CA) during a rally with fellow Democrats before voting on H.R. 1, or the People Act, on the East Steps of the US Capitol on March 08, 2019 in Washington, DC. (AFP photo)
A well head and drilling rig in the Yarakta oilfield, owned by Irkutsk Oil Company (INK), in the Irkutsk region, Russia, March 11, 2019. (Reuters photo)

Oil prices rose on Monday, recovering from a seven-day losing streak with support from a weaker dollar, although concern about surging cases of the Delta coronavirus variant led to cautious trading.

Brent crude climbed $1.23, or 1.9%, to $66.41 a barrel by 0701 GMT, after dipping to $64.60 earlier in the session, its lowest level since May 21.

US West Texas Intermediate (WTI) crude for October delivery rose $1.13, or 1.8%, to $63.27 a barrel, recovering from $61.74, also a low since May 21, hit in early Asia trade.

Both benchmarks marked their biggest week of losses in more than nine months last week - Brent slid about 8% and WTI fell about 9% - as markets braced for weakened fuel demand worldwide due to the surge in the pandemic.

"Oil prices took a breather (on Monday) after their steep drops last week," said Kazuhiko Saito, chief analyst at Fujitomi Securities Co Ltd.

"We expect to see more adjustments this week, but the market sentiment will likely remain bearish with growing concerns over slower fuel demand worldwide," he added.

Many nations are responding to the rising coronavirus infection rate, triggered by the highly transmissible Delta variant, by introducing new travel restrictions.

China, the world's largest crude oil importer, has imposed new restrictions with its 'zero tolerance' coronavirus policy, which is affecting shipping and global supply chains. The United States and China have also imposed flight-capacity restrictions. read more

While the pandemic drags on fuel demand, supply is steadily increasing. US production rose to 11.4 million barrels per day in the most recent week, and drilling firms added rigs for the third week in a row, services company Baker Hughes said. read more

But a slide in the US dollar provided some support, making crude less expensive for holders of other currencies.

"A softer dollar prompted investors to rewind their positions," said Chiyoki Chen, chief analyst at Sunward Trading.

The dollar index , which measures the currency against six peers, traded at 93.349, down slightly from 93.734, its highest in more than nine months hit on Friday.

Investors were also adjusting their positions before the Federal Reserve's annual Jackson Hole, Wyoming symposium on Friday, Chen said.

The pandemic surge prompted the Fed to move the symposium to an online format, raising questions about the central bank's broader assessment of the Delta variant's economic impact as it inches toward tapering stimulus. read more

(Source: Reuters)

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