Oil: Profits, after two days of losses

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International oil prices recovered on Thursday, after two days of losses, in a session of high volatility, driven by the weakness of the dollar and the belief that China will soon loosen the restrictions it has recently imposed on major urban centers due to of Covid-19, which will increase the demand for crude.

Both Brent and US crude saw “wild changes” before finally stabilizing on the upside.

“The market has become extremely volatile,” said Andrew Lipow, president of Lipow Oil Associates in Houston. “The market reacts to all kinds of news headlines hour by hour, with the movement of the oil markets on a daily basis having acquired elements of exaggeration.”

The global benchmark, Brent oil delivery in July closed at $ 112.04 a barrel, with gains of $ 2.93 or 2.7% while on the other side of the Atlantic, the American WTI crude delivery in June closed higher at $ 2.62, or 2.4%, at $ 112.21 a barrel.

In China, the easing of restrictions in Shanghai is expected from June 1, which will boost demand in the world’s largest oil importer.

The fall of the dollar was also a factor in the strengthening of crude prices, with the index measuring the strength of the dollar against its six international competitors falling by 1% on a daily basis, after its recent rally. International crude prices often fluctuate against the dollar, as a strong US currency makes it more expensive to import crude for holders of other currencies.

However, investors, worried about rising inflation and central banks’ aggressive interest rates, are reducing their exposure to high-risk investment products, such as oil.

The lingering possibility of a European Union embargo on Russian oil, on the other hand, supports prices.

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Source: Capital

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