By Adedapo Adesanya
Oil prices staged a comeback, rising by about 5 per cent on Monday, recovering from a seven-day losing streak with gains driven by a weaker Dollar despite demand concerns strengthened by rising cases of the Delta coronavirus variant.
At the market yesterday, the Brent crude gained $3.41 or 5.23 per cent to trade at $68.59 per barrel, while the West Texas Intermediate (WTI) crude moved up by $3.34 or 5.37 per cent to $65.48 per barrel.
After dropping more than 8 per cent last week, the new week opened with a breather as a slide in the US Dollar provided some support, making crude less expensive for holders of other currencies.
Analysts noted as the American currency went soft, prompting investors to rewind their positions.
The Dollar index, which measures the currency against six other major currencies – Euro, Swiss Franc, Japanese Yen, Canadian Dollar, British Pound and Swedish Krona., traded at 93.349, down slightly after hitting its highest in more than nine months on Friday at 93.734.
This is coming after signals that the United States Federal Reserve might rethink plans to taper their asset-buying program if the Delta variant slows economic growth.
This week, the markets will be watching the Jackson Hole annual symposium of the US, which will be held virtually, where it will be decided if the Federal Reserve might taper the stimulus asset purchase program.
Good news out of China, the world’s top crude oil importer, also boosted prices as the Asian giant reported zero local cases of COVID-19 after weeks of localized lockdowns and suspension of public transport services and flights, which took a toll on fuel demand.
The market is still impacted by weak economic data out of China which weakened prices.
This is further compounded by demand slowdown as the Delta variant of COVID-19 spreads, leading to new lockdowns in countries including Japan and New Zealand.
Additionally, last week’s US inventory report also showed a rise in fuel stocks as well as an uptick in output from US producers.
Goldman Sachs, meanwhile, said that macro headwinds including the reflation unwind and Covid concerns in China are covering the bullish backdrop for oil.
Modupe Gbadeyanka