Oil overturned an early drop to push higher after US President Joe Biden wrapped up a landmark visit to the Middle East without a firm commitment from key producer Saudi Arabia to boost crude supplies.
West Texas Intermediate neared $US99 a barrel after dropping almost 7 per cent last week as investors fretted that a global slowdown may hurt demand and the US dollar hit a record. While US energy envoy Amos Hochstein said he is confident Persian Gulf producers will raise output after Biden’s visit to Saudi Arabia, local ministers insisted that policy decisions would be taken according to market logic and within the OPEC+ coalition, a grouping that includes Russia.
Crude has slumped since mid-June as concerns about a potential recession ripped through commodity markets, eroding the gains that followed Russia’s invasion of Ukraine. While the drop has been a boost for the US administration, Biden remains eager to get the Organisation of Petroleum Exporting Countries to add supplies to bring prices down further and help quell inflation.
OPEC and its allies including Russia next meet on August 3 after members agreed to revive the crude supplies that were halted during the coronavirus pandemic.
“The OPEC+ quota system ends in September, and attention is turning to what will happen next,” said Stephen Innes, managing partner at SPI Asset Management. “I would not be surprised to see something packaged at the end of OPEC September agreement, or even sooner, that may allow those with spare capacity to up their quota a touch and Biden could declare a win.”
While futures have fallen in recent weeks, the market remains firmly in backwardation, a bullish pattern marked by near-term prices trading above longer-dated ones. Brent’s prompt spread -- the gap between its two nearest contracts -- was almost $US4 a barrel, up from $US2.73 about a month ago.
Oil’s swing to a gain on Monday came as the US dollar lost a little ground. After hitting a record last week, the Bloomberg Dollar Spot Index traded 0.2 per cent lower, making raw materials priced in the greenback cheaper for holders of other currencies. Other commodities including copper also gained.
Investors also focused on the return of crude shipments from Libya. Prime Minister Abdul Hamid Dbeibah said that the country’s exports are on track for a full resumption after months of outages as he justified his replacement of the leadership at state-run oil company National Oil Corp.
In India, meanwhile, gasoline and diesel sales during the first half of July dropped from last month as seasonal rains cut demand in the third-biggest energy consumer. The drop was the first monthly decline in three months.
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