Brent oil futures increased 89 cents, or 0.9%, to $101.88 a barrel.
Related: Oil prices climb amid indications that OPEC may reduce supply.
on August 29, 2022
MELBOURNE Oil prices increased by 1% on Monday, as predictions that OPEC would cut production if necessary to sustain prices, the crisis in Libya, and growing demand from skyrocketing natural gas costs in Europe helped balance a bleak prognosis for U.S. economic growth.
At 02:41 GMT, U.S. West Texas Intermediate (WTI) oil futures rose $1.09, or 1.2%, to $94.15 a barrel, adding to last week’s 2.5% increase.
The Brent oil futures price increased 89 cents, or 0.9%, to $101.88 per barrel, extending last week’s 4.4% increase.
In a report, National Australia Bank commodities experts stated, “Oil prices strengthened in the face of persistent pressure on fuel demand from Europe’s energy crisis and supply bottlenecks.”
Related: Oil prices are rising as demand improves.
The weekend’s heavy skirmishes in the capital of Libya, which resulted in the deaths of 32 people, raised worry that the country may descend into a full-scale conflict, which could again delay crude oil exports from the OPEC member, they added. Read further
Earlier in the day, both benchmark futures traded lower as the dollar went up. This was because Federal Reserve Chairman Jerome Powell said on Friday that the U.S. faced a long period of slow growth and more rate hikes, which caused the dollar to rise.
Tina Teng, an analyst at CMC Markets, stated, “While a strong currency restrains broad commodity prices, the undersupply situation in the oil markets will likely continue to maintain the bullish bias.”
Oil prices have gone up because Saudi Arabia and other members of the Organization of Petroleum Exporting Countries (OPEC) and allies, known as OPEC+, have said they might cut supply to balance the market.
A person familiar with the situation told Reuters on Friday that the United Arab Emirates agrees with Saudi Arabia on output strategy and that the Omani oil ministry supports OPEC+ efforts to maintain market stability. Read further
Sources said last week that OPEC might cut production to counter any boost from Iran if oil sanctions are put back in place if Tehran decides to revive a nuclear agreement.
Related: Oil prices rise on potential OPEC+ supply cuts as BP shuts US refinery units.
Teng stated that Iran’s output will not make up for the supply deficit anytime soon.
In a note, analysts from ANZ Research said that higher prices for natural gas in Europe are causing power producers and industrial users to switch to diesel and fuel oil, which is putting even more pressure on crude prices.
