On Friday, oil prices climbed on the back of the weaker US Dollar that fell to 22-month lows. However, the gains were weighed down by the outlook of coronavirus cases which could harm demand and the geopolitical tensions between the US and China.
By 01.37 GMT, Brent crude oil futures rose by 0.4% or 15 cents to USD43.46/barrel while the US WTI crude futures edged up by 0.3% or 12 cents to USD41.19/barrel.
Against a basket of currencies, the US Dollar went down near the lowest level in two years and boosted the purchase of commodities offered in the greenback including oil.
Analyst Edward Moya of OANDA commented that crude prices are supported by the expectations that the US Congress would deliver another pandemic relief package for the country as data showed that the economy is still struggling.
In the week ended July 17, the US filing of unemployment benefits jumped for the first time in almost four months to 1.416 million, signaling the impact of the resurgence in coronavirus cases to the country’s economy.
On Thursday, the US again posted more than a thousand deaths from the virus for the third day in a row as the pandemic escalates in its southern and western states. The reading raised fears of the renewed government lockdowns which could further harm oil demand.
Another fact that put a cap on the oil price gain is the geopolitical tensions between the US and China. On Wednesday, Washington ordered China to close its consulate in Houston and Beijing has stated the necessity of retaliation without disclosing more detail.
Barclays Commodities Research expected a correction in oil prices in the near term, on account of a slowing recovery in fuel demand. The oil market surplus forecast for this year is being lowered to 2.5 million bpd from the previous 3.5 million bpd.
