Oil climbs on Chinese demand and weakened dollar

Market influenced by concerns over additional interest hikes in the US and increased oil inventories, says analyst.
Photo: Jacob Ehrbahn
Photo: Jacob Ehrbahn

Oil climbs on Monday morning on projections of rising Chinese demand and a weakened dollar providing support to the market, writes Reuters.

A barrel of European reference crude Brent trades at USD 83.09 on Monday morning, up from USD 82.02 on Friday afternoon. Simultaneously, US West Texas Intermediate goes for USD 77.00, up from USD 76.04.

Market sentiment is rattled by concerns over further US interest hikes and rising inventories, says an analyst from ANZ Bank to Reuters.

Oil market is currently driven by competing factors including that a weaker greenback makes oil cheaper for holders of other currencies, which in turn supports oil prices. Saudi Aramco CEO Amin Nasser commented on Sunday that crude demand from China also provided some support.

”If you considered China opening up and a pick up in jet fuels and very limited spare capacity, we are talking 2 million barrels, so as I said, we are cautiously optimistic in the short to midterm and the market will remain tightly balanced,” he said, according to Reuters.

The comment comes in the wake of Saudi Arabia striking a China-brokered deal with Iran to restore diplomatic relations. The partnership could potentially pave the way for a revival of a nuclear deal that would allow exports of currently-sanctioned Iranian crude.

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