Oil reversed an initial drop to rise after US President Joe Biden wrapped up a historic visit to the Middle East without a firm commitment from key producer Saudi Arabia to boost crude supplies.
est Texas Intermediate approached $99 a barrel after falling nearly 7% last week as investors feared a global slowdown could hit demand and the dollar hit a record high. While US energy envoy Amos Hochstein said he was confident Persian Gulf producers would ramp up production after Biden’s visit to Saudi Arabia, local ministers insisted political decisions would be made independently. according to the logic of the market and within the OPEC+ coalition, a group that includes Russia.
Crude oil has tumbled since mid-June as recession concerns swept through commodity markets, eroding gains that followed Russia’s invasion of Ukraine. While the drop has been a boost for the US administration, Biden remains eager to get the Organization of the Petroleum Exporting Countries to add supplies to further reduce prices and help quell inflation. OPEC and its allies, including Russia, are due to meet on August 3 after members agreed to revive crude supplies that were halted during the coronavirus pandemic.
“The OPEC+ quota system ends in September and the focus is on what happens next,” said Stephen Innes, managing partner at SPI Asset Management. “I wouldn’t be surprised to see something packaged at the end of the OPEC deal in September, or even sooner, that might allow those with spare capacity to increase their quota a bit and Biden could declare a victory.”
While futures have fallen in recent weeks, the market remains firmly in a pullback, a bullish pattern marked by short-term prices trading above longer-term ones. Brent’s quick spread, the gap between its two closest contracts, was nearly $4 a barrel, up from $2.73 about a month ago.
Oil’s turn to a gain on Monday came as the dollar lost a bit of ground. After hitting a record high last week, the Bloomberg Dollar Spot Index traded 0.2% lower, making dollar-priced commodities cheaper for holders of other currencies. Other commodities, including copper, also gained.
Investors also focused on the return of oil shipments from Libya. Prime Minister Abdul Hamid Dbeibah said the country’s exports are on track to fully resume after months of interruptions, justifying his replacement of the leadership at state oil company National Oil Corp.
Meanwhile, in India, sales of gasoline and diesel during the first half of July fell from last month as seasonal rains reduced demand in the third-largest energy consumer. The drop was the first monthly drop in three months.