Oil prices continue their gains supported by weak dollar and tight supplies

Oil prices extended gains on Monday, buoyed by a weak dollar and tight supplies that offset fears about a recession and the possibility that widespread shutdowns in China to combat COVID-19 will again reduce demand for fuel.

Brent crude futures for September delivery settled 69 cents, or 0.7 percent, at $101.85 a barrel by 0421 GMT, after a 2.1 percent increase on Friday.

US West Texas Intermediate crude futures for August delivery also rose 27 cents, or 0.3 percent, to $97.86 a barrel, after rising by 1.9 percent in the previous session.

The US dollar retreated from multi-year highs on Monday, supporting the prices of commodities ranging from gold to oil. A weak dollar makes dollar-denominated commodities more accessible to holders of other currencies.

Last week, Brent and West Texas Intermediate posted their biggest weekly declines in about a month amid fears of a recession hurting oil demand.

Mass testing for COVID-19 continued in parts of China this week, raising concerns about oil demand in the world’s second-largest oil consumer.

However, oil supplies remain tight, which supports prices.

As expected, US President Joe Biden’s trip to Saudi Arabia failed to get any pledge from the largest producer in the Organization of the Petroleum Exporting Countries (OPEC) to increase oil supply. This expectation that there would be no additional oil helped raise prices last Friday, ahead of Biden’s talks with Saudi Crown Prince Mohammed bin Salman.

Biden wants Gulf oil producers to increase production to help cool high oil prices and lower inflation.