Oil prices went up boosted by the weak dollar

Oil futures prices gave up the losses from the previous week and settled higher on Monday. The dollar index dropped to its lowest level in two years and it supported the rise of crude oil prices. However, the spread of coronavirus cases and economic uncertainty, plus China-US tensions limited the further gains of the commodity. 

Marshall Steeves, an energy market analyst at IHS Markit, stated that the recent weakness in the dollar has been helpful to dollar-denominated commodities. It allows oil-importing countries to get oil at cheaper rates. It is changing market supply and demand dynamics in support of higher oil prices. 

The US dollar index is at its lowest point since September 2018. US-China tensions, concerns about the domestic economy, and the resurgence in coronavirus cases show no signs of relaxing. 

Monetary stimulus measures are supporting oil prices

According to the data from John Hopkins University, the number of coronavirus cases exceeded 16 million in total. The number surpassed 4 million in the US, with Brazil following with 2.3 million cases and India with approximately 1.3 million cases. Asian countries imposed new lockdowns. At the same time, Great Britain imposed a quarantine on passengers returning from Spain. 

US Senate Republicans unveiled a new $1 trillion coronavirus aid package. Analysts from Raymond James stated that massive monetary stimulus measures are bullish for oil. The prices of the commodity have seen an upward trend with inflation spikes. 

Brent crude gained 32 cents, or 0.7%, to $43.66 a barrel, while U.S. West Texas Intermediate (WTI) crude increased to reach $41.62 a barrel or 33 cents.

US-China tensions make the recovery path of the commodity uneven

Escalating tensions between two global economies, the US and China, have been curbing the gains of oil prices. The two countries closed consulates in Houston, USA, and Chengdu, China.

In July, Brent is on track for a fourth straight monthly gain. Unprecedented supply cuts from OPEC member countries and its allies have been helping this growth. Oil production has also dropped sharply in the United States. However, last week, for the first time since March, the oil rig count rose in the country. Marshall Steeves said that near long term prospects toward WTI oil are neutral to bullish.

Even though black gold prices have improved, the recovery path is still uneven. Jeffrey Halley, a senior market analyst at OANDA, stated that oil seems to be caught between contradicting forces.