Oil rates see rise on weak USD, increasing supply concerns
Date
7/1/2024 10:02:40 AM
(MENAFN) On Monday, oil rates saw a rise driven by several factors including a weakened US dollar, ongoing uncertainties regarding US Federal Reserve interest rate policies, and geopolitical tensions in key oil-producing regions.
Brent crude, the international benchmark, traded at USD85.66 per barrel, marking a 0.77 percent increase from the previous session's closing price of USD85. American benchmark West Texas Intermediate (WTI) also saw a rise, trading at USD82.22 per barrel, up by 0.83 percent.
The depreciation of the US dollar against other currencies, falling to 105.52, contributed to the uptick in oil prices. A weaker dollar typically makes oil cheaper for holders of other currencies, stimulating demand and consequently pushing prices higher.
Market sentiment remains cautious amidst uncertainties surrounding the timing of the Federal Reserve's potential interest rate cut. While expectations for a rate cut this year are strengthening, analysts are awaiting signals from Fed Chairman Jerome Powell's upcoming speech and the release of the Fed's June meeting minutes for clearer guidance.
Geopolitical tensions in crucial oil-producing regions further bolstered oil prices. Escalating conflicts in the Middle East, home to a significant portion of global oil reserves, and ongoing tensions involving Russia, one of the world's largest oil producers, heightened concerns about potential disruptions to oil supply.
Specific incidents, such as an Israeli airstrike in Gaza City that resulted in casualties, added to geopolitical anxieties. These events also raised fears of broader regional instability, potentially impacting oil supply routes, including the Red Sea, a vital maritime passage for oil and fuel shipments.
The combination of these factors—currency movements, monetary policy uncertainty, and geopolitical tensions—contributed to the bullish sentiment in oil markets at the start of the week, highlighting the complex interplay of economic and geopolitical factors influencing oil prices globally.
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