Oil prices surged 5% on Monday, as a weaker dollar and strong global equities markets boosted crude futures after seven sessions of declines. Brent crude climbed $3.57, or 5.5%, to end the session at $68.75 a barrel after touching its lowest since May 21 at $64.60 during the session.U.S. West Texas Intermediate (WTI) crude for October delivery rose $3.50, or 5.6%, to settle at $65.64. Both benchmarks marked their highest week of losses in more than nine months last week, with Brent sliding about 8% and WTI about 9%.
The drop in the U.S. dollar provided a boost on Monday, making crude less expensive for holders of other currencies. Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Illinois said that the Oil complex has generally been able to shrug off strength in the stock market, the bullish combo of increased risk appetite and significant weakening in the U.S. dollar indices represents a potent mix that Oil has been forced to recognize.
The dollar index, which measures the currency against six peers, was down 0.4% after hitting its highest level in more than nine months on Friday. The MSCI world equity index, which tracks shares in 50 countries, was up, after having its biggest weekly fall since June last week. Many nations are reacting to the surging coronavirus infection rate by introducing new travel restrictions.
The world’s largest Oil importer China has imposed new restrictions, which is affecting shipping and global supply chains. The United States and China have also imposed restrictions on flight capacity. Baker Hughes said that the pandemic drags on fuel demand, supply is steadily increasing. U.S. production rose and drilling companies added rigs for the third week in a row, services companies.