Oil settles mixed on questions over crude supply, demand, strong dollar
Oil prices settled mixed on Monday as investors wondered whether crude supplies will increase and whether demand will be pressured by the recent surge in energy costs, the strong dollar and rising COVID-19 cases.
Brent futures settled down 12 cents, or 0.2%, to $82.05 a barrel while U.S. West Texas Intermediate (WTI) crude rose 8 cents, or 0.1%, to $80.88.
In early trading, the oil market factored in speculation that President Joe Biden’s administration could fight high prices by releasing crude oil from the U.S. Strategic Petroleum Reserve, but skepticism about that approach caused U.S. crude to edge higher, according to John Kilduff, partner at Again Capital LLC in New York.
Weighing on oil prices, the U.S. dollar hit a 16-month high against a basket of currencies as investors worried about the global economy.
A stronger dollar makes oil more expensive for buyers using other currencies.
Last week, U.S. energy firms added oil and natural gas rigs for a third week in a row, encouraged by a 65% increase in U.S. crude prices so far this year.
U.S. shale production in December is expected to reach prepandemic levels of 8.68 million barrels a day, according to Rystad Energy. Meanwhile there are indications demand may be slowing due to heightened coronavirus cases and inflation.
The Organization of the Petroleum Exporting Countries (OPEC) last week cut its world oil demand forecast for the fourth quarter by 330,000 bpd from last month’s forecast, as high energy prices hampered economic recovery from the COVID-19 pandemic.
Reference: CNBC
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