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oil prices: Oil races back above $100 on soft dollar and supply jitters

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oil prices: Oil races back above $100 on soft dollar and supply jitters

LONDON – Oil prices extended gains on Monday, boosted by heightened concerns about Russian gas supplies and a weaker dollar, offsetting demand concerns from a possible recession and China’s lockdown.

Brent crude futures for September settlement rose $4.44, or 4.4%, to $105.60 a barrel by 1427 GMT, after rising 2.1% on Friday.

U.S. West Texas Intermediate (WTI) crude for August delivery rose $4.10, or 4.2%, to $101.69 after rising 1.9% in the previous session.

Russia’s gas export monopoly Gazprom has declared force majeure on gas supplies to at least one major customer in Europe, according to the letter seen by Reuters, which could exacerbate the supply crunch on the continent.

“If Russia doesn’t resupply gas to Germany after Nord Stream 1 maintenance, Brent will find support this weekend,” said Jeffrey Halley, senior analyst at OANDA.

A trade source said the letter concerns supply through the Nord Stream 1 pipeline, the main supply route to Germany and beyond.

“It is not clear whether Russian gas exports to Germany will resume,” said Hans Van Cleef, senior energy economist at ABN AMRO.

“As European leaders resolve to tighten sanctions against the Kremlin, the likelihood that the Russian government will announce further cuts to gas flows to Europe as a counterattack increases.”

The dollar retreated from multi-year highs on Monday, supporting prices of commodities ranging from gold to oil. A weaker dollar has made dollar-denominated commodities more affordable for holders of other currencies.

Brent and WTI both posted their biggest weekly declines in about a month last week on fears that a recession will hit oil demand.

Meanwhile, mass COVID-19 testing campaigns continued in parts of China this week, raising concerns about oil demand in the world’s second-biggest oil consumer.

However, supply remains tight. As expected, U.S. President Joe Biden’s trip to Saudi Arabia failed to get OPEC’s top producer to make any pledges to increase oil supply.

Biden wants Gulf oil producers to boost output to help lower oil prices and lower inflation.

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