Oil prices jump with the decline of the dollar and the shortage of supply

Oil prices extended gains on Monday, July 18, supported by a weak dollar and tight supplies, which 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 at $103.76 a barrel by 7:59 GMT, after a 2.1% gain on Friday.

US West Texas Intermediate crude futures for August delivery also rose to $100.21 a barrel, after rising by 1.9% in the previous session.

The US dollar fell from multi-year highs on Monday, supporting commodity prices that include gold and oil. A weak dollar reduces the cost of commodities denominated in it 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 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.

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