🚀 AI-picked stocks soar in May. PRFT is +55%—in just 16 days! Don’t miss June’s top picks.Unlock full list

Oil up as bulls seek higher ground amid dollar dip, Fed-related flux

Published 04/24/2023, 01:57 PM
Updated 04/24/2023, 02:59 PM
© Reuters
DX
-
LCO
-
CL
-
US10YT=X
-

Investing.com -- Crude prices rose for a second session in a row on Monday as bulls in the space leveraged on the weakness in the dollar, which dipped again after last week’s positive close, the first in five weeks for the U.S. currency.

New York-traded West Texas Intermediate, or WTI, settled up 89 cents, or 1.1%, at $78.76 a barrel. WTI rose by 0.6% on Friday but ended the week down 5.6%, snapping a four-week rally heightened by this month's production maneuver by OPEC+ that had brought a net gain of 24%.

London-traded Brent, the global benchmark for crude, finished Monday's trade up $1.07,  or 1.3%, at $82.73. Brent finished up 0.7% on Friday while ending the week down 5.4%.

“It’s some weakness in the dollar but I would put it down to market flux ahead of the Fed hike expected next week,” John Kilduff, partner at New York energy hedge fund Again Capital, said, referring to the quarter point increase expected at the Fed’s rate decision on May 3.

If the Fed does as the market thinks it would, then the central bank would have implemented monetary tightening for a tenth time in 13 months, bringing rates to a peak of 5.25% versus the pandemic-era rate of just 0.25%.

The dollar rebounded from last week from one-year lows ahead of the May 3rd Fed rate decision. A higher dollar weighs on overseas demand for commodities priced in the currency. Higher U.S. Treasury yields sap the appeal of risk-heavy assets, while also limiting flows of foreign capital.

Also aiding oil bulls on Monday was optimism that holiday travel in China would boost fuel demand in the world's largest oil importer.

China's bumpy economic recovery after the COVID-19 pandemic has clouded the oil demand outlook, though Chinese customs data on Friday showed record volumes of imports in March, Reuters reported.

Bookings in China for trips abroad during the upcoming May Day holiday point to a continued recovery in travel to Asian countries, but the numbers remain far off pre-COVID levels with long-haul airfares soaring and not enough flights available.

"There's a lot of optimism around Chinese holidays as it relates to jet fuel demand, the first genuine numbers on Chinese demand construction," said Bob Yawger, director of energy futures at Mizuho, in comments carried by Reuters.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.