Oil prices rose slightly on Monday as strong summer fuel demand and rising geopolitical tensions helped offset the impact of a stronger dollar.
Brent futures for August delivery rose 53 cents to $85.77 a barrel, representing a gain of 0.6% by 11:38 a.m. EST (1538 GMT). Meanwhile, US crude futures rose 65 cents to $81.38 a barrel, representing a gain of 0.8%. Last week, both benchmarks recorded a 3% rise, their second consecutive weekly rise.
“Crude oil prices witnessed significant volatility and declined from recent highs due to dollar index strength and mixed global economic data. The dollar index hit its highest level in nearly two months as hawkish comments from the Federal Reserve and mixed US economic data limited gains in oil prices. However, decline in US crude oil inventories last week and improvement in global oil demand outlook provided support to crude oil prices. Additionally, geopolitical tensions in the Middle East and the Russia-Ukraine conflict are contributing to support of crude oil prices. We estimate that crude oil prices will remain volatile in today’s session. Crude oil has support at $79.85 to $79.20 and resistance at $81.30 to $82.00,” said Rahul Kalantri, VP Commodities, Mehta Equities Ltd.
What is the impact on crude oil prices?
Geopolitical tensions in the Middle East and an increase in Ukrainian drone attacks on Russian refineries are contributing to support for oil prices.
“The OPEC+ meeting in early June increased the nervousness of the bulls, causing the price to drop below this line for a while, but it once again attracted buyers. The 200-week moving average serves as a long-term trend indicator. This represents an average price level over four years—about half of the traditional business cycle. Alex Kuptsikevich, senior market analyst at FXPro, said regular touches of this line raise the question whether the world economy is teetering on the brink of recession, but is avoiding it for the time being.
On Monday, EU countries agreed to new sanctions against Russia for its actions in Ukraine, including a ban on the reloading of Russian liquefied natural gas (LNG) within the EU for onward shipment to third countries. Is included.
Meanwhile, the stronger US dollar has raised the cost of dollar-denominated goods for buyers using other currencies.
The dollar index, which measures its value against six major currencies, rose on Friday and saw a modest rise on Monday after reports that U.S. business activity reached a 26-month peak in June.
In Ecuador, sources said state oil company Petroecuador has declared force majeure on Napo heavy crude exports due to the closure of a key pipeline and oil wells due to heavy rainfall.
