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Oil on track for monthly gain as dollar weakness supports

Oil on track for monthly gain as dollar weakness supports

Oil prices rose on Friday and were on track for monthly gains, benefiting from a weaker dollar which continued to be hit by concerns over the recovery of the U.S. economy as the coronavirus ravages economic output.

  • Reuters
  • Last Updated: July 31, 2020, 5:38 PM IST
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LONDON Oil prices rose on Friday and were on track for monthly gains, benefiting from a weaker dollar which continued to be hit by concerns over the recovery of the U.S. economy as the coronavirus ravages economic output.

Brent crude was up 43 cents, or 1%, at $43.37 a barrel by 1130 GMT. On Thursday, Brent closed 1.9% down after touching its lowest since July 10.

U.S. crude gained 36 cents, or 0.9%, to $40.28 after dropping 3.3% in the previous session, also off lows not seen since July 10.

Brent is on track for a fourth month of gains and U.S. crude is heading for a third as both rise from depths hit in April, when much of the world was in lockdown.

The dollar extended its dramatic fall on Friday and was on course for its biggest monthly drop in a decade after news on Thursday that U.S. gross domestic product collapsed at a 32.9% annualised rate – the steepest decline in output since records began in 1947.

Investors typically use dollar-denominated commodities as safe havens when the currency weakens and vice versa.

“Global stimulus and a weak dollar will continue to support oil prices as historically oil is seen as a hedge against inflation,” said Keshav Lohiya, CEO of consultancy Oilytics.

Globally, the economic outlook has dimmed again, with increasing coronavirus infections raising the risk of renewed lockdowns and threatening any rebound, according to Reuters polls of more than 500 economists.

Weaker refining margins around the world, lower Chinese oil demand and high crude inventories are putting further pressure on oil prices, Lohiya said.

Germany also registered a record decline in output, with Europe’s largest economy contracting by 10.1% quarter on quarter.

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(Additional reporting by Aaron Sheldrick; Editing by David Goodman and Susan Fenton)

Disclaimer: This post has been auto-published from an agency feed without any modifications to the text and has not been reviewed by an editor

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  • First Published: July 31, 2020, 5:38 PM IST
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