Investors hopeful as oil gains 1% since last week’s dip

Oti Francis

Oil is aiming for a recovery this week supported by new trade reinforcement in the global crude market and a weaker U.S. dollar.

The West Texas Intermediate which fell last week has regained a few notches up 1.7% since last week’s dip. Statistics from the American government disclose an unexpected draw in crude inventories following  Hurricane Ida.

The lax dollar has stimulated the recovery of a few transactions, making goods like crude a bit more affordable for buyers outside the United States.  

This week’s gain seems to be an aftermath of this week’s meeting of members of the Organization of Petroleum Exporting Countries and its allies  (OPEC+) as they address market concerns and the impact of the delta variant on supply and demand.

OPEC+ identified key concerns like the stockpiles in developed nations and positive market recovery from regions in Asia like China witnessing more demand from independent refiners and an increase in India’s gasoline consumption.

According to the founder of Vanda Insights, Vandana Hari, “There’s probably some more upside,” said Vandana Hari, founder of Vanda Insights. “The delta wave is on its last legs and unless another nasty variant sweeps in, economic and oil-demand sentiment should start looking up.”

In the United States, for example, oil-producing corps in the Gulf of Mexico are still making conscious attempts to reboot productions after Hurricane Ida. Companies like the Royal Dutch Shell Plc and Exxon Mobil Corp felt the impact at their Louisiana bases.

More information on the extent of damage done by Hurricane Ida is anticipated after President Biden surveys areas affected in Louisana. Biden is expected to meet with Louisiana’s Governor John Bel Edwards and local reps in the state, where a large population of Americans has lost homes and businesses, and in a blackout. 

Prices:

WTI for October delivery was 0.1% lower at $69.92 a barrel on the New York Mercantile Exchange at 7:35 a.m. in London.

Brent for November settlement was 0.1% higher at $73.13 a barrel on the ICE Futures Europe exchange.

Investors including in commodities are also awaiting key U.S. payrolls data for insights into the strength of the labor market recovery, which may help to influence the Federal Reserve’s plan to taper its asset-purchase program. A weaker-than-expected reading may aid the dollar, buoying oil.

Credit: Bloomberg, Rigzone.

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