Oil prices saw a slight increase on Monday as traders balanced the anticipated rise in summer demand and geopolitical tensions against the impact of a stronger dollar. By 0850 GMT, Brent crude futures had risen by 15 cents, or 0.2%, reaching $85.39 per barrel, while U.S. West Texas Intermediate crude futures were up by 13 cents, or 0.2%, at $80.86 per barrel. Both benchmarks experienced approximately 3% gains last week, marking their second consecutive week of increases.
Tamas Varga from oil broker PVM highlighted the growing confidence that global oil inventories would significantly decrease during the summer in the northern hemisphere, driven by seasonal demand for oil products, as a primary reason for the recent price strength. Geopolitical risks, including Middle Eastern tensions and an increase in Ukrainian drone attacks on Russian refineries, have also played a role in supporting oil prices.
On Monday, EU countries approved a new set of sanctions against Russia in response to its war in Ukraine. This package includes a ban on reloading Russian liquefied natural gas (LNG) in the EU for shipment to third countries. Meanwhile, a strengthening U.S. dollar has made dollar-denominated commodities less appealing to holders of other currencies. IG analyst Tony Sycamore noted that the U.S. dollar had strengthened following positive U.S. PMI data released on Friday night and political concerns ahead of the French election. The dollar index, which measures performance against six major currencies, rose on Friday and continued to climb slightly on Monday after data revealed that U.S. business activity had reached a 26-month high in June.
In Ecuador, state oil company Petroecuador declared force majeure on deliveries of Napo heavy crude for export. This decision followed the shutdown of a key pipeline and oil wells due to heavy rain, as reported by sources on Friday. In the United States, the number of active oil rigs fell by three to 485 last week, the lowest count since January 2022, according to a report by Baker Hughes on Friday.
Challenger Energy Group plc (LON:CEG) is a Caribbean and Atlantic margin focused oil and gas company, with a range of petroleum assets located onshore in Trinidad and Tobago, and Suriname, and offshore in the waters of The Bahamas and Uruguay.
