Oil rises on tight supplies and weaker US dollar

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Oil rises on tight supplies and weaker US dollar

Crude oil
Image source: © 2022 Kalkine Media®

Highlights

  • Crude oil prices jump on Monday.
  • A tight gasoline market amid a solid demand due to the peak US driving season has additionally buoyed the global crude oil prices.
  • Lockdown in the world's biggest crude oil-consuming nation China has dented industrial output and construction.

Crude oil prices gained on Monday on the back of rising fuel demand in the US, lingering tight supplies, and a weaker US dollar. A weak dollar makes oil economical for other currency holders. The prices of both oil benchmarks were also lifted on expectations of higher demand in China as Shanghai prepares to reopen after a two-month lockdown.

A tight gasoline market amid a solid demand due to the peak US driving season has additionally buoyed the global crude oil prices. Usually, the US peak driving season begins on Memorial Day weekend in May end and ends on Labour Day in September.

The prices of both oil benchmarks gained as much as 0.79% in the last week with WTI crude oil futures gaining nearly 2.03% in the same period.

Also Read: Crude oil surges to 14-year highs on delays in Iranian talks

Both crude oil benchmarks have grown remarkably in the last three months after Russia officially announced Ukraine's invasion.

Rising oil prices

Image source: © 2022 Kalkine Media®

On Friday, Brent Crude oil settled at US$111.55/bbl, and WTI crude oil settled at US$110.49/bbl.

On Monday, August delivery Brent Crude oil futures gained and last traded at US$111.16 per barrel up 1.06%, while July delivery WTI crude oil futures exchanged hands at US$111.38 per barrel, up 1.00% at 3:58 PM AEST.

Must Watch: As Russia-Ukraine War Intensifies, Commodities Also Soars

China ready to ease lockdown

Lockdown in the world's biggest crude oil-consuming nation China has dented industrial output and construction.

The global energy markets expect the lifting of COVID-19 led restrictions in Shanghai from 1 June 2022 despite the city announcing its first new COVID-19 cases outside quarantined areas in five days.

At the same time, European Union is trying to clinch a deal on a proposed ban on Russian oil imports, keeping a few member states out of the deal which is highly dependent on Russian oil imports.

Also Read: Crude oil slides from multi-year highs as Iran talks rev up

The European Union’s inability to unify its member states to reach a conclusion has also stopped oil from climbing much higher.

Bottom Line

Crude oil prices gained significantly on Monday, extending last week's rally on prospects of increasing demand as China eases COVID-19 led lockdowns in Shanghai.

Here’s how commodities performed in the last week click here

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