Oil overcame an early decline to surge higher after US President Joe Biden completed a landmark visit to the Middle East without a firm commitment from key producer Saudi Arabia to boost crude supplies.
est Texas Intermediate neared $99 a barrel after falling nearly 7 percent last week as investors feared a global slowdown could hurt demand and the dollar hit a record. While US Energy Secretary Amos Hochstein said he was confident Persian Gulf producers will ramp up production following Biden’s visit to Saudi Arabia, local ministers insisted that policy decisions should be made according to market logic and within the OPEC+ coalition, a group that includes Russia.
Crude oil has tumbled since mid-June as fears of a potential recession gripped commodity markets, erasing gains following Russia’s invasion of Ukraine. While the US government’s decline gave a boost, Biden remains keen to get the Organization of Petroleum Exporting Countries to add supplies to further lower prices and quell inflation. OPEC and its allies, including Russia, will next meet on August 3 after members agreed to revive crude oil supplies that have been halted during the coronavirus pandemic.
“The OPEC+ quota system ends in September and attention is on what will happen next,” said Stephen Innes, managing partner at SPI Asset Management. “I wouldn’t be surprised if something was packaged at the end of the OPEC-September deal or even earlier that could allow those with spare capacity to increase their quota a bit and Biden could announce a win.”
While futures have fallen over the past few weeks, the market remains firmly in backwardation, a bullish pattern characterized by short-term prices outperforming longer-term ones. Brent’s prompt spread — the gap between the two closest contracts — was nearly $4 a barrel, up from $2.73 about a month ago.
Monday’s rise in oil prices came as the dollar lost some ground. After hitting a record last week, the Bloomberg Dollar Spot Index traded 0.2% lower, making greenback-valued commodities cheaper for holders of other currencies. Other commodities, including copper, also rose.
Investors also focused on the repatriation of crude oil shipments from Libya. Prime Minister Abdul Hamid Dbeibah said the country’s exports were on track for a full resumption after months of blackouts as he announced his ouster at the top of state-owned oil company National Oil Corp.
In India, on the other hand, gasoline and diesel sales fell in the first half of July from last month as seasonal rains reduced demand from the third-largest energy consumer. The decline was the first monthly decline in three months.
https://www.independent.ie/business/world/oil-advances-as-traders-weigh-middle-east-supply-after-bidens-trip-41847442.html Oil advances as traders weigh Middle East supply after Biden trip