Oil Prices Balanced As Weak Dollar Neutralize Low Demand

Oil Prices Balanced As Weak Dollar Neutralize Low Demand

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In Friday's session, crude prices moved up on economic data from Europe, but gains were limited as tensions between the United States and China flared.

Brent crude fell 25 cents to $43.06 a barrel by 0713 GMT, and US West Texas Intermediate (WTI) crude eased 28 cents to $40.79.

"Oil. lost its lustre as demand-side jitters returned to the fore of concerns".

While a recent rally has been supported by faster-than-expected rebalancing of supply and demand as countries reopen their economies, producers cut production and the USA dollar weakens, "we are not there yet in terms of fundamentals for the next leg higher", analysts at the bank said in a note. "Looking ahead, the oil market will likely settle back into a wait-and-see mode amid the increasingly uncertain environment".

China said the USA move to close its Houston consulate this week had "severely harmed" relations and warned it "must" retaliate, without detailing what it would do.

The West Texas Intermediate (WTI) for September delivery rose 22 cents to settle at 41.29 US dollars a barrel on the New York Mercantile Exchange, while Brent crude for September delivery was up 3 cents to close at 43.34 dollars a barrel on the London ICE Futures Exchange. Weakness in the greenback pushes buying in commodities that are priced in dollar such as oil.

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The EU news was so bullish that it encouraged traders to ignore a surprise build in US crude oil inventories and worries that a surge in USA coronavirus cases could cap fuel demand.

The variety of Americans declare welfare struck 1.416 million recently, all of a sudden increasing for the very first time in nearly 4 months, recommending the US financial healing is stalling in the middle of a renewal in COVID-19 cases.

Globally, more than 15 million have actually been contaminated and over 620,000 have actually passed away.

The price action is being manipulated by escalating tensions between the United States and China against a backdrop of rising coronavirus cases, which could be dragging down fuel demand.

Also in China, the number of daily passenger flights has rebounded to 80 percent of pre-coronavirus levels, the country's aviation regulator said on Friday, with robust demand continuing despite fresh infections in some regions; this, along with reports of yet more advances in vaccine development, this time from Germany, China, and Russian Federation, could lend support to oil in the coming days and weeks.

Oil prices could see a near-term correction if a recovery in fuel demand slows further, especially in the United States, Barclays Commodities Research said.

The bank decreased its oil market surplus projection for 2020 to approximately 2.5 million barrels each day (bpd) from 3.5 million bpd formerly.

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