Oil prices rose in Asian trade on Monday, reversing the weak start as a recovery in Chinese demand and a weaker dollar provided support to a market shaken by anticipation of possible US interest rate hikes.
After the initial decline, Brent crude futures were up 19 cents, or 0.23%, to $82.97 a barrel as of 0410 GMT. West Texas Intermediate crude futures (WTI) rose 20 cents, or 0.26%, to $76.88 a barrel.
Market sentiment remains fragile as high crude inventories in the US exacerbate concerns about further monetary tightening by the Fed.
Growing activity data in the East resists macro disturbance in the West. According to the competitive sentiment in the crude oil market, the U.S. dollar pulls back in case the traders in a feeling of giving up on a re-acceleration of Fed hikes. This paves the way for stronger Chinese fundamentals to dominate commodity trading.
A weaker dollar gives support to oil prices by making oil cheaper for holders of other currencies.
Troubles at Silicon Valley Bank and New York-based Signature Bank and concerns about possible spillover to other banks led to a sell-off in US assets at the end of last week, putting downward pressure on the dollar.
State regulators closed New York-based Signature Bank on Sunday, the third largest failure in U.S. banking history, two days after authorities shuttered Silicon Valley Bank in a collapse that stranded billions in deposits.
Comments by Saudi Aramco CEO Amin Nasser on crude oil demand from China on Sunday provided some support.
If we consider the opening of China and the rise of jet fuels and very limited spare capacity, we’re talking about 2 million barrels. Therefore, there is cautious optimism in the short and medium term and the market is likely to remain firmly in the balance.
Meanwhile, there are comments that Riyadh and Tehran have agreed to restore diplomatic relations in a China-brokered deal, potentially leading to a resurgence of a nuclear deal that would allow the export of currently sanctioned Iranian crude.
Oil’s volatile start to the week follows the surprising positive momentum that US jobs data made on Friday. According to a survey, February data beat expectations and non-farm employment rose by 311,000, while 205,000 new jobs were expected.
Energy services firm Baker Hughes has cut the number of oil and gas rigs by US energy firms for the fourth week in a row this week, according to a medium- and long-term supply perspective, in a report released Friday. This happens first time since July 2020.
