© Stocksak. FILE PHOTO – Pumpjacks are seen at sunset at Daqing oil field, Heilongjiang province China, August 22, 2019. Picture taken August 22, 2019. REUTERS/Stringer
SINGAPORE (Stocksak), Monday, Oil prices rose on Monday due to expectations of tighter supplies globally in the face of European Union sanctions against Russia.
Futures rose 54cs, or 0.6%, at $94.04 a bar by 0125 GMT. U.S. West Texas Intermediate crude crude was at $85.56 in the same period, up 51cs, or 0.6%.
Brent gained 2% last week due to a weaker dollar, and in hopes that China will loosen COVID-19 restrictions that would allow for more demand at the No. 2. Consumer to rebound.
The EU’s ban of Russian imports will be in effect from Dec. 5. This could cause disruptions in global oil supplies. The group also plans block imports from Russia of oil products in February.
The Federal Reserve is feeling more positive about reducing the size or pace of future interest rate increases, even though it is expected to raise rates in November.
A slowdown in Fed rate increases could reduce the strength of the U.S. Dollar, which has had a negative impact on commodity prices. A weaker dollar makes commodities that are dollar-denominated, such as oil, more affordable for holders of other currencies.
China’s Xi Jinping won a record-breaking third term as China’s leader on Sunday. This cements his position as the country’s most powerful ruler ever since Mao Zedong.
Analysts don’t expect any significant changes in policy direction, not even Xi’s zero-COVID strategy.
Brent rose last week despite U.S. President Joe Biden announcing that the remaining 15 million barrels from the U.S. Strategic Petroleum Reserves were being sold. This sale is part of a record 180-million-barrel oil release that began in May. Biden stated that he would like to replenish stocks at $70 per barrel.
Analysts at ANZ stated in a note that “the market was more interested the guidelines for refilling reserve.”
“Biden’s comment that the U.S. would only buy crude oil if prices reach USD70/bbl gives a strong support level.”
Baker Hughes Co, an energy services firm, reported that last week, U.S. oil firms added oil and drilling rigs for the second consecutive week because of high oil prices, which encourages firms to drill more.