Oil rises on stronger dollar and robust fuel demand; brent crude at $85.77/bbl

Brent futures for August delivery increased by 53 cents to reach $85.77 per barrel, marking a 0.6% gain, as of 11:38 a.m. EST (1538 GMT). Meanwhile, U.S. crude futures climbed 65 cents to $81.38 per barrel, reflecting a gain of 0.8%.

Written By Vaamanaa Sethi
First Published24 Jun 2024, 10:48 PM IST
Crude oil prices experienced significant volatility and declined from their recent highs due to the strengthening of the dollar index and mixed global economic data.
Crude oil prices experienced significant volatility and declined from their recent highs due to the strengthening of the dollar index and mixed global economic data.(AP)

Oil prices rose slightly as expectations of robust summer fuel demand and escalating geopolitical tensions offset the impact of a stronger dollar, on Monday.

Brent futures for August delivery increased by 53 cents to reach $85.77 per barrel, marking a 0.6% gain, as of 11:38 a.m. EST (1538 GMT). Meanwhile, U.S. crude futures climbed 65 cents to $81.38 per barrel, reflecting a gain of 0.8%.

Last week, both benchmarks registered a 3% increase, marking their second consecutive weekly rise.

Also Read | Brent up 5% in June on demand outlook: How to place bullish bets on MCX crude?

“Crude oil prices experienced significant volatility and declined from their recent highs due to the strengthening of the dollar index and mixed global economic data. The dollar index surged to nearly two-month highs, driven by hawkish comments from the Federal Reserve and mixed U.S. economic data, which limited gains in oil prices. However, a decline in U.S. crude oil inventories last week and an improved global oil demand outlook provided support for crude oil prices. Also, geopolitical tensions in the Middle East and the Russia-Ukraine conflict are contributing to the support for crude oil prices. We expect crude oil prices to remain volatile in today’s session. Crude oil has support at $79.85-$79.20 and resistance at $81.30-$82.00,” said Rahul Kalantri, VP Commodities, Mehta Equities Ltd.

What's weighing on crude oil prices?

Geopolitical tensions in the Middle East and increased Ukrainian drone strikes on Russian refineries are contributing to the support of oil prices.

"The OPEC+ meeting in early June rattled the bulls' nerves, briefly pushing the price below this line, but this once again attracted buyers. The 200-week average acts as a long-term trend indicator, marking the average price level over nearly four years—about half of the traditional business cycle. Regular touches of this line raise the question that the world economy is walking on the edge of recession but avoiding it for now, said Alex Kuptsikevich, the FxPro senior market analyst.

On Monday, EU countries agreed on a fresh set of sanctions against Russia for its actions in Ukraine, including a prohibition on the reloading of Russian liquefied natural gas (LNG) within the EU for onward shipment to third countries.

Also Read | Gold and silver prices today on 24-06-2024: Check latest rates in your city

Meanwhile, the strengthening U.S. dollar has raised the cost of dollar-denominated commodities for buyers using other currencies.

The dollar index, which measures its value against six major currencies, rose on Friday and saw a slight increase on Monday following reports of U.S. business activity reaching a 26-month peak in June.

In Ecuador, sources reported that state oil company Petroecuador has declared force majeure on exports of Napo heavy crude due to the closure of a critical pipeline and oil wells caused by heavy rainfall.

 

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First Published:24 Jun 2024, 10:48 PM IST
HomeMarketsCommoditiesOil rises on stronger dollar and robust fuel demand; brent crude at $85.77/bbl

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