By Adedapo Adesanya
The price of the international crude oil benchmark, Brent Crude, jumped on Tuesday by 2.2 per cent or $1.71 to $79.40 per barrel at the market, boosted by a falling US Dollar, hopes for higher demand in the developing world and supply cuts by the world’s biggest oil exporters.
Also, the West Texas Intermediate (WTI) crude rose by 2.5 per cent or $1.84 to settle at $74.83 per barrel during the trading day, as the US Dollar dropped to a two-month low against a basket of other currencies a day after several Federal Reserve officials signalled the American central bank was near the end of its tightening cycle.
Against the Japanese Yen, the Dollar fell to a four-week trough of 140.17 points. The US currency also plunged to its lowest in more than two years versus the Swiss Franc as well as against the Pound Sterling.
Several US Fed officials said on Monday that the US central bank would likely need to raise interest rates further to bring down inflation, but the end to its current monetary policy tightening cycle was getting close.
The comments knocked the greenback to a two-month low of 101.66 points against a basket of currencies as traders pared back their expectations about how much further US rates may have to rise. The Dollar index was last down 0.3 per cent at 101.65 points.
A weaker Dollar makes crude cheaper for holders of other currencies.
Support also came as data trickled in the US as small business confidence climbed to a seven-month high in June.
The National Federation of Independent Business (NFIB) said its Small Business Optimism Index rose 1.6 points to 91 last month, the greatest month-to-month improvement since August 2022.
However, a still-tight employment market in the world’s largest economy continued to drive concerns about inflation.
Markets will await US inflation data on Wednesday for clues on the interest rate outlook. Higher rates can slow economic growth and reduce oil demand.
The International Energy Agency (IEA) said the oil market should remain tight in the second half of 2023, citing strong demand from China and developing countries combined with recently announced supply cuts, including by top exporters Saudi Arabia and Russia.
The IEA will publish new forecasts this week.
Dipo Olowookere