Oil prices jumped 3 percent on Monday, recovering from a seven-day losing streak, with gains driven by a weaker dollar despite demand concerns stoked by rising cases of the delta coronavirus variant.
Brent crude climbed $2.08, or 3 percent, to $67.26 a barrel by 1052 GMT after touching its lowest since May 21 at $64.60.
US West Texas Intermediate (WTI) crude for October delivery rose $1.90, or 3 percent, to $64.04.
Both benchmarks marked their biggest week of losses in more than nine months last week, with Brent sliding about 8 percent and WTI about 9 percent.
Many nations are responding to the rising coronavirus infection rate by introducing new travel restrictions.
“We expect to see more adjustments this week, but the market sentiment will likely remain bearish, with growing concerns over slower fuel demand worldwide,” said Kazuhiko Saito, chief analyst at Fujitomi Securities.
Many nations are responding to the rising coronavirus infection rate, triggered by the highly transmissible delta variant, by introducing new travel restrictions.
China, the world’s largest crude oil importer, has imposed new restrictions with its ‘zero tolerance’ coronavirus policy, which is affecting shipping and global supply chains. The United States and China have also imposed flight-capacity restrictions.
While the pandemic drags on fuel demand, supply is steadily increasing. US production rose to 11.4 million barrels per day in the most recent week, and drilling firms added rigs for the third week in a row, services company Baker Hughes said.
But a slide in the US dollar provided some support, making crude less expensive for holders of other currencies.
“A softer dollar prompted investors to rewind their positions,” said Chiyoki Chen, chief analyst at Sunward Trading.
The dollar index, which measures the currency against six peers, traded at 93.349, down slightly from 93.734, its highest in more than nine months hit on Friday.
Investors were also adjusting their positions before the Federal Reserve’s annual Jackson Hole, Wyoming symposium on Friday, Chen said.
The pandemic surge prompted the Fed to move the symposium to an online format, raising questions about the central bank’s broader assessment of the Delta variant’s economic impact as it inches toward tapering stimulus.
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