Oil prices rise on China’s demand and weaker dollar – Business

Oil prices rose in late morning Asian trade on Monday, reversing a weak start as a rebound in Chinese demand and a weaker dollar lent support to a market rattled by the prospect of possible further U.S. interest rate hikes.

After initially falling, Brent crude futures rose 19 cents, or 0.23 percent, to $82.97 a barrel. barrel at 0410 GMT. West Texas Intermediate crude futures (WTI) rose 20 cents, or 0.26 percent, to $76.88 a barrel.

Market sentiment was fragile as concerns about further monetary policy tightening by the Fed have been exacerbated by high crude oil inventories in the US, analysts at ANZ Bank noted in a note on Monday morning.

“It’s like the battle with rising activity data in the East meets macro malaise in the West,” said Stephen Innes, managing partner of SPI Asset Management, commenting on the competing sentiment drivers in the crude oil market.

“From an oil trader’s perspective, the US dollar should retreat as traders abandon a re-acceleration of Fed hikes; this in turn paves the way for more robust Chinese fundamentals to dominate commodities trading,” Innes added.

A weaker dollar makes oil cheaper for holders of other currencies, providing support for oil prices.

The failure of Silicon Valley Bank and New York-based Signature Bank and concerns about possible contagion led to a sell-off in US assets late last week, which has also put downward pressure on the dollar.

Comments on Sunday from Saudi Aramco CEO Amin Nasser on crude demand from China also provided some support.

“If you considered the opening of China and an increase in jet fuels and very limited spare capacity, we are talking about two million barrels, so as I said we are cautiously optimistic in the short to medium term and the market will remain tightly balanced,” he said.

The comments come in the wake of the announcement that Riyadh and Tehran had agreed to restore diplomatic ties in a China-brokered deal, potentially paving the way for the revival of a nuclear deal that would allow the export of Iranian crude, as in currently sanctioned.

Oil’s fluctuating start to the week follows positive momentum on Friday, when US employment numbers surprised to the upside. Data for February beat expectations, with nonfarm payrolls rising by 311,000 compared with expectations for 205,000 jobs added, according to a Reuters examination.

From a medium- to long-term supply perspective, energy services firm Baker Hughes Co said on Friday that U.S. energy companies this week cut the number of oil and natural gas rigs operating for the fourth straight week for the first time since July 2020.

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