Biden's failure. Oil prices rose on July 18 as the US dollar weakened and after President Joe Biden wrapped up his trip to Saudi Arabia, failing to secure a commitment from the Middle Eastern country to boost crude output.
Brent crude futures for September settlement were up $2,42, or 2,4%, at $103,58 a barrel at 5:30 a.m. New York time on July 18, after rising 2,1 percent on Friday.
U.S. West Texas Intermediate (WTI) crude futures for August delivery rose $2,04, or 2,09 percent, to $99,64 a barrel, after rising 1,9 percent in the previous session .
Last week, both Brent and WTI posted their biggest weekly declines in about a month as recession fears dampened market sentiment.
However, oil supplies remained tight and the US dollar has retreated from recent highs, with both factors supporting crude prices.
Dollar weakened
The dollar weakened on Monday after hitting multi-decade highs against a basket of peers last week. The DXY dollar index reached nearly 109 on July 14, before retreating to 107,3 at 6:36 a.m. time New York on July 18th.
A weaker dollar tends to support the prices of oil and other dollar-denominated commodities, as it makes them a more attractive market for holders of other currencies.
Some analysts said Monday's oil rally was unlikely to last, with high inflation keeping pressure on central banks to keep tightening even in the face of growing signs of an economic slowdown.
"Bear market rebound," is how Keith McCullough, CEO of investment research firm Hedgeye, described Monday's crude moves in a post on Twitter.
Buoyed by a weaker dollar, other commodities rose on Monday, including wheat and copper. A key industrial input, copper is seen by many analysts as a barometer of a recession.
"Another good example of a falling market bouncing back this morning," McCullough said of the action in copper, which was up more than 3 percent on Monday morning after falling 8,2 percent last week. week.
Wheat futures on the Chicago Stock Exchange rose 1,6 percent on July 18, recovering from five-month lows.
Biden in Saudi Arabia
Monday's moves in the price of oil and other commodities come after Biden's visit to Saudi Arabia ended without a commitment to boost oil supply from the Kingdom.
Biden called on Saudi Arabia and other Gulf oil producers to increase oil production in an effort to reduce high gasoline prices and, more generally, inflation.
Inflation in the United States, as measured by the Consumer Price Index (CPI), accelerated in June to a new 40-year high of 9,1%.
Despite Monday's rally in some commodities, they have trended lower in recent weeks, suggesting inflationary pressures may be easing.
Gasoline prices have fallen in recent weeks, with GasBuddy analyst Patrick DeHaan saying in a July 17 statement that the most common gas price in the United States was now $3,99 a gallon.
The median gas price was $4,39 a gallon nationwide, while the 10 percent most expensive locations averaged $5,71, De Haan added.
Despite the non-commitment from Saudi Arabia to boost production, Biden administration officials had some hope for a little more supply-side relief.
Amos Hochstein, the State Department's senior adviser on energy security, told CBS' "Face the Nation" on July 17 that, after Biden's trip, several Gulf oil producers would take "a few more steps" to boost oil production. production, although it did. don't say which countries and how much.
But ING analysts said in a note that the Biden administration's view that producers in the Middle East would boost output looked rosy and "comments from Saudi Arabia were less optimistic."
"The Saudis said any changes in production would be made within the broader context of OPEC+ and that the group would monitor the market and respond if necessary," they wrote, adding that with the exception of Saudi Arabia and the United Arab Emirates, there is "little way to spare capacity".
Markets will be closely watching the next OPEC+ meeting for supply signals as the cartel's current production pact expires in September.
The alliance of oil producing countries meets on August 3.
Image: www.middleeastMonitor.com
