Oil prices climb 1.1% in early trade due to renewed supply fears

29 Jul 2022 , 02:41 PM

U.S. West Texas Intermediate (WTI) crude futures for September delivery were up $1.09, or 1.1%, to $97.51 per barrel, rebounding losses from the previous session when confidence was dampened by worries about an American recession.

The price of a barrel of Brent crude futures for September settlement, which are expected to expire on Friday, increased by 86 cents (0.8%) to $108.00. October's more active contract increased by 87 cents, or 0.9%, to $102.70.

While WTI is expected to rise about 3% this week, making up for losses from the prior week, Brent is expected to jump over 5% for the week, marking its second consecutive weekly gain.

Since a lower dollar makes crude cheaper for buyers using other currencies, oil normally increases when the value of the dollar declines.

The Organization of the Petroleum Exporting Countries (OPEC) and its allies, collectively known as OPEC+, will meet again on August 3, and it will be crucial because the producers have now reversed the record 9.7 million barrels per day (bpd) supply cut they agreed to in April 2020, when the COVID-19 pandemic hit demand hard.

After visiting Saudi Arabia this month in the hopes of reaching an agreement on oil production, US President Joe Biden would be disappointed if it were decided not to increase output.

The government is bullish about the OPEC+ meeting, according to a senior U.S. administration official, who also claimed that increased supply would help stabilize the market.

Analysts noted that several producers are finding it difficult to reach their output requirements due to a lack of investment in oil fields, making it harder for OPEC+ to significantly increase supply.