Weaker dollar pushes oil higher after seven days of declines

Global crude prices jumped more than 5% as strong equities markets across the world and a weakening US dollar boosted the commodities landscape.

International benchmark Brent rose by 5.5% to $68.75 per barrel after dropping to its lowest since May 21. US West Texas Intermediate (WTI) crude for October delivery advanced 5.6%, settling at $65.64. Earlier in the day, the contract jumped over 6% to hit a session high of $66.

Last week, both contracts posted their biggest week of losses in more than nine months with Brent plunging nearly 8% and WTI nearly 9%.

However, as the US dollar retreated from a recent high over the past week, crude became less expensive for holders of other currencies. The greenback was down 0.4% against six major peers, after hitting its highest level in more than nine months at the end of last week.

“Although 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 US dollar indices represents a potent mix that oil has been forced to recognize,” President of Ritterbusch and Associates in Illinois Jim Ritterbusch told Reuters.

Meanwhile, China reported no new local Covid-19 infections for the first time since July, suggesting that the world’s largest oil importer has brought the latest outbreak under control.

“News of zero new cases in China has certainly provided a tailwind as it gives added light at the end of the Covid tunnel and a breath of fresh air to the demand landscape,” CNBC quoted analysts at Blue Line Futures as saying.

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