Economy

Oil prices steady as weak dollar balances low demand

Oil prices steady as weak dollar balances low demand”

Brent futures fell 98 US cents, or 2.2 per cent, to settle at $US43.31 a barrel, while US West Texas Intermediate (WTI) crude fell 83 US cents, or 2.0 per cent, to settle at $US41.07.

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.

The dollar slid to 22-month lows against a basket of currencies.

A weaker dollar generally stimulates purchasing of products priced in the greenback, like oil, since they end up being less expensive for holders of other currencies.

"Yesterday's US economic data showed that the economic recovery is struggling and pretty much guarantees more federal aid is coming".

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.

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However, gains have been tempered over the past couple of days by a surprise build in USA crude oil stocks, while a surge in new coronavirus cases continued to dampen a recovery in fuel demand.

China ordered the United States to close its consulate in the city of Chengdu on Friday, responding to a USA demand this week that China close its Houston consulate.

However, global oil demand remains low due to the rapidly increasing number of global cases of the novel coronavirus (COVID-19), which surpassed 15.5 million late Thursday, according to the latest data from Johns Hopkins University.

Relations between Washington and Beijing have deteriorated sharply this year over a range of issues, from trade and technology to the coronavirus, China's territorial claims in the South China Sea and its clampdown on Hong Kong.

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

With massive stimulus packages and good signs from various Covid-19 vaccines early trial result, crude oil traders, could breach the strong support level of Brent at $45, regardless of OPEC+ easing some curbs on its crude oil output by 2 million barrels per day.



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