Oil advances, in the wake of supply limitations and US holiday

Oil futures contracts advanced in this Monday’s session (20) on a day of less liquidity due to a holiday in the United States, which left local markets closed. Uncertainties about the economy put pressure on prices last week, but the scenario of reduced supply prevailed and drove prices into the black.

On Nymex electronic trading, WTI for August rose 0.80% to $108.85 a barrel, around 2:40 pm (GMT). Brent for the same month traded on the Intercontinental Exchange (ICE) closed up 0.89%, or $1.01, at $114.13 a barrel.

The commodity fluctuated between gains and losses throughout the day, as lower trading volumes stimulated volatility. The risk aversion that prevailed on the trading desks penalized the energy asset last week, with losses that reached 7%.

The move reflected the firm response of central banks in developed countries to the historic escalation of inflation. The Federal Reserve, for example, accelerated monetary tightening and raised the benchmark interest rate by 75 basis points, after hikes of 25 basis points in March and 50 basis points in July. .

The scenario raised fears that the aggressive posture of the American BC would push the largest economy on the planet into a recession, with negative repercussions for the demand for oil. This parallels the expected slowdown in China, which insists on strict measures to contain the coronavirus.

Despite this, the outlook for oil is still high, while the war in Ukraine, the maintenance of sanctions against Iran and the political crisis in Libya limit production. “The fundamental picture remains one of tight supply amid the continued slowdown in Russian production,” say analysts at ANZ bank.

*With information from Dow Jones Newswires