Oil prices up 2% on weakening dollar, supply worries

At 12.50 pm, Brent’s September contract on the Intercontinental Exchange was at $103.59 a barrel, up 2.40% from its previous close. West Texas Intermediate (WTI) August contract rose 2.20% to $99.74 a barrel on the NYMEX.

“The dollar index slipped from a 20-year high which supported global commodities at lower levels. US economic data released on Friday was also better than expected and supported oil prices,” said Rahul Kalantri, Vice President of Commodities at Mehta Equities Ltd. He added that the dollar is likely to remain volatile this week.

Kalantri also said that crude oil prices jumped after media reports, quoting a US official, said that an immediate increase in Saudi Arabia’s oil production is not expected.

Ravindra Rao, Head of Commodity Research, Kotak Securities, said: “The crude oil contract may remain choppy amid the situation near the expiry, but weakness may persist till the risk sentiment improves significantly.”

The rise in prices comes after oil traded on a highly volatile note last week. Rising Covid cases in China, prospects of a new lockdown and fears of a global recession weighed on prices last week. However, analysts say that concerns still remain. China is one of the biggest importers of oil and widespread COVID-related sanctions will severely impact oil demand from the country.

Despite volatility in oil prices globally, domestic retail prices of petrol and diesel have remained unchanged for almost two months. Petrol price in the national capital is 96.72 per liter, while diesel is sold for 89.62 per liter.

Prices in Mumbai were last revised on July 15 after the new state government announced reduction in Value Added Tax (VAT) on petrol. 5 liters and bye 3 liters for diesel. Petrol price in Mumbai is now 106.31 per liter, while that of diesel is 94.27 per litre.

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