Forex Pros – Crude oil futures were up on Monday, rebounding from Friday’s sharp decline as a weaker U.S. dollar supported prices, but gains were limited amid concerns over a slowdown in global demand and after reports Saudi Arabia planned to increase oil production.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in July traded at USD98.98 a barrel during European morning trade, gaining 0.1%.
It earlier rose to a daily high of USD99.32 a barrel.
Weakness in the U.S. dollar helped lift crude prices. The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.13% to trade at 75.16.
Dollar weakness usually benefits commodities, as it boosts their appeal as an alternative asset and makes dollar-priced commodities cheaper for holders of other currencies.
Meanwhile, Iran’s OPEC governor Mohammad Aliabadi said over the weekend that an increase in crude output by the Saudis was not necessary, as the market is adequately supplied to meet current demand.
On Friday, crude prices slumped nearly 3% after London-based al-Hayat Newspaper reported that Saudi Arabia planned to increase production to 10 million barrels per day in June, up 13% from May and the highest level in 30 years.
Global financial service provider JP Morgan noted that the 10-million barrel increase would raise production by 500,000 barrels per day from current levels.
Concerns over the global economic outlook, especially in the world’s two biggest oil consumers, the U.S. and China, also limited gains.
Data on Friday showed that China reported a trade surplus of USD13.1 billion in May, significantly below expectations for a surplus of USD19.1 billion, as export growth slowed.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for July delivery added 0.27% to trade at USD118.33 a barrel, up USD19.35 on its U.S. counterpart.
The nearly USD20.00 gap is an all-time high. The two contracts historically have traded within USD1.00 of each other.
ForexPros.com
