By Adedapo Adesanya
Oil prices rose more than $5 or 5 per cent on Monday as a result of a weakness in the United States Dollar.
At the market yesterday, the Brent crude was sold at $106.27 per barrel after it jumped by $5.11 or 5.1 per cent, while the US West Texas Intermediate (WTI) crude went for $102.60 per barrel after also gaining $5.01 or 5.1 per cent.
Traders rushed the commodity following a broad-based weakening in the US dollar that has been providing a key driver behind daily oil price swings during the past several weeks.
The US Dollar retreated from the 20-year high it reached last week, helping the Euro move away from parity against the greenback.
The USD index fell 0.464 per cent with the Euro up 0.64 per cent to $1.0152.
The Japanese Yen strengthened 0.35 per cent versus the greenback to $138.08, while the British Pound Sterling was at $1.1957, up 0.89 per cent.
Expectations that the US Federal Reserve won’t raise interest rates by a full percentage point at its next meeting to combat inflation also boosted prices.
US policymakers said they favoured a rate increase of 75 basis points at its policy meeting this month and not the bigger increase traders had priced in after a report last week showed inflation in the world’s largest oil producer hit 9.1 per cent.
Also supporting prices was tight oil prices after US President Joe Biden’s trip to Saudi Arabia did not yield any pledge from the top producer of the Organisation of the Petroleum Exporting Countries (OPEC) to boost oil supply.
Mr Biden wants Gulf oil producers to step up output to help to lower oil prices but analysts say the market should not expect the Saudis to immediately raise oil supply to the market or even to announce a planned production increase.
On Monday, Iraq’s oil minister, Mr Ihsan Abdul Jabbar, said that oil is likely to continue trading above $100 for the remainder of this year.
“I would like OPEC to retain its tools to measure and control output and maintain the existing balance. We will discuss that with our partner,” Mr Abdul Jabbar said.
The next meeting for OPEC and its allies, OPEC+ will be on August 3.
More disruptions could follow in Libya as tensions rose amid the take-over of the country’s National Oil Company (NOC) after the alleged lifting of force majeure at all oilfield and export terminals.
On Sunday, the new chairman of the NOC, Me Farhat Bengdara, made an official statement ending the blockade of Libya’s oilfields and ports. The announcement came just days after armed forces entered the NOC headquarters in an attempt to force the resignation of the long-time chairman, Mr Mustafa Sanalla.