Oil prices extend gains as weaker dollar, tight supplies support

Oil prices extended gains on Monday, propped up by a weaker dollar and tight supplies that offset concerns about recession and the prospect of widespread COVID-19 lockdowns in China again reducing fuel demand.

Brent crude LCOc1 futures for September settlement rose 69 cents, or 0.7%, to $101.85 a barrel by 0421 GMT, after a 2.1% gain on Friday, reports Reuters.

US West Texas Intermediate (WTI) crude CLc1 futures for August delivery edged up 27 cents, or 0.3%, to $97.86 a barrel, after climbing 1.9% in the previous session.

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

Last week, Brent and WTI posted their biggest weekly drops in about a month on fears of a recession that will hit oil demand. Mass COVID testing exercises continued in parts of China this week, raising oil demand concerns at the world’s second-largest oil consumer.

However, oil supplies remained tight, supporting prices. As expected, US President Joe Biden’s trip to Saudi Arabia failed to yield any pledge from the top OPEC producer to boost oil supply.

Biden wants Gulf oil producers to step up output to help tame oil prices and drive down inflation.

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