Oil futures ended higher on Monday, with prices marking their first gain in three sessions after a further rise in COVID-19 cases in China and the higher-than-expected US inflation reading last week a pulled prices to their lowest intraday level in nearly a week.
West Texas Intermediate crude for delivery in July CL.1,
rose 26 cents, or 0.2%, to settle at $120.93 a barrel on the New York Mercantile Exchange after hitting an intraday low of $117.47.
August Brent crude BRN00,
the global benchmark, added 26 cents, or 0.2%, to $122.27 a barrel on ICE Futures Europe after a low of $118.93. WTI and Brent touched their lowest intraday levels since June 7 on Monday. Prices for both benchmarks hit three-month highs last week.
Back to Nymex, July gasoline RBN22,
fell 3.3% to $4.0353 a gallon, continuing a decline from last week’s all-time highs, while July HON22 fuel oil,
lost 1.9% to $4.2834 a gallon.
July Natural Gas Futures NGN22,
lost 2.7% to $8.609 per million British thermal units.
Beijing has decided to increase testing after a COVID-19 outbreak linked to a nightclub. The outbreak has infected at least 183 people in 15 districts, according to news reports.
Concerns that China will lock down more cities due to a rise in COVID, as well as the stock market ‘obliterated’ by rising interest rate expectations, have hurt the outlook for energy demand , leading to oil price losses early Monday, Phil Flynn, senior market analyst at The Price Futures Group, told MarketWatch.
However, concerns about further shutdowns in China appeared to ease on Monday afternoon, and traders’ attention “returned to tight supply”, he said.
Edward Moya, senior analyst at OANDA, said oil prices rose after the Energy Information Administration reported on Monday that the oil market will remain tight for the foreseeable future.
EIA data shows that the oil and natural gas industry’s exploration and development spending in 2021 was 28% lower than the pre-pandemic five-year average from 2015 to 2019.
Given that “risk appetite is rapidly leaving Wall Street and one of the few trades that still looks attractive is oil,” Moya told MarketWatch. “You can tell the oil market is very tight, as even headlines of a deteriorating COVID outlook in China are not driving crude prices down sharply.”
Libya’s oil production has been nearly halted due to political protests, with production down to around 1.1 million barrels per day from an average of 1.2 million barrels per day last year , Bloomberg reported on Monday, citing comments by Libyan Oil Minister Mohamed Oun.
Still, U.S. stocks suffered another session of heavy losses as a selloff in global equities continued following a Friday consumer price index reading that showed the inflation had hit a 40-year high of 8.6% year-on-year in May.
“If the Fed were to raise interest rates significantly higher in response and the US economy slips into recession, that would also affect demand for oil in the world’s largest oil-consuming country,” Carsten Fritsch said. , a commodity analyst at Commerzbank, in a statement. Remark.
Meanwhile, US President Joe Biden is expected to announce a trip next month to Saudi Arabia, The Wall Street Journal reported on Sunday. This “leads to speculation that perhaps the Saudis could add more barrels,” said Flynn of the Price Futures Group, adding that he is “still very skeptical of their ability to accommodate” any US calls for more. of oil.
A further surge in the US dollar on expectations of the US Federal Reserve to step up its aggressive monetary tightening efforts has been a headwind for crude and other commodities priced in unity. A stronger dollar makes them more expensive for users of other currencies.
The ICE US dollar index DXY,
a measure of the currency against a basket of six major rivals, rose 0.8%.
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