HOUSTON – Oil prices rose over 1% on Monday, bolstered by supply fears, a dip in the U.S. dollar and stronger equity markets, but prices seesawed as some worried rising U.S. interest rates would weaken fuel demand.
Source: Reuters
Brent crude futures for September rose $1.30, or 1.2%, to $104.45 a barrel by 1:09 p.m. ET (1710 GMT), while U.S. West Texas Intermediate (WTI) crude futures rose $1.46, or 1.5%, to $96.19 a barrel.
“A slightly weaker U.S. dollar and improving equity markets are supporting oil,” UBS oil analyst Giovanni Staunovo said.
Oil futures have been volatile in recent weeks, pressured by worries that rising interest rates could limit economic activity and thus cut fuel demand growth but supported by tight supply especially since Russia’s invasion of Ukraine and Western sanctions on Moscow.
“The U.S. and European economies are slowing and with the Federal Reserve set to raise interest rates again this week, traders remain very cautious,” said Dennis Kissler, senior vice president of trading at BOK Financial.
Fed officials have indicated the U.S. central bank would likely raise rates by 75 basis points at its July 26-27 meeting.
China, the world’s second-biggest economy, narrowly missed a contraction in the second quarter, growing just 0.4% year-on-year.
But a steep front-month premium over the second month continues to signal near-term supply tightness. The spread settled at $4.82/bbl on Friday, an all-time high when excluding expiry-related spikes in the two previous months.
But analysts expect Libya’s output to remain volatile as tensions remained high after clashes between rival political factions over the weekend.
