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Oil rose back near $100 a barrel, aided by a weaker dollar that put wider commodity markets on a firmer footing.
West Texas Intermediate added as much as 3.1%. European stock markets and US equity futures were higher on Monday. The dollar weakened — making commodities priced in the currency more attractive — as investors scaled back bets on how aggressively the Federal Reserve will tighten interest rates. Other raw materials including copper also gained.
President Biden concluded a trip to the Middle East last week and said he expects further oil supply increases from Saudi Arabia to help tame fuel costs. However, local ministers insisted that policy decisions would be taken according to market logic and within the OPEC+ coalition, a grouping that includes Russia.
Crude has slumped since mid-June as concerns about a potential recession ripped through commodity markets, eroding gains that followed Russia’s invasion of Ukraine. While the drop has been a boost for the US administration, Biden remains eager to get the Organization of Petroleum Exporting Countries to add supplies to bring prices down further and help quell inflation.
“We continue to expect a further tightening of the oil market, warranting higher oil prices,” UBS analysts including Giovanni Staunovo wrote in a note. “Following the meeting between the US and Saudi leaders over the weekend, we learned that OPEC+ will only open the taps if the market conditions warrant it.”
OPEC and its allies including next meet on Aug. 3 after members agreed to revive the crude supplies that were halted during the coronavirus pandemic.
Investors also focused on the return of crude shipments from Libya. Prime Minister Abdul Hamid Dbeibah said the country’s exports are on track for a full resumption after months of outages as he justified his replacement of the leadership at state-run oil National Oil Corp.
South Africa’s largest fuel producer declared force majeure on the supply of petroleum products due to delays in crude deliveries to the Natref refinery it jointly owns.
In India, meanwhile, gasoline and diesel sales during the first half of July dropped from last month as seasonal rains cut demand in the third-biggest energy consumer. The drop was the first monthly decline in three months.