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Oil futures edged higher Monday, finding support from a continued slide by the U.S. dollar as traders watched efforts in Washington to craft another round of rescue spending and assessed the continued spread of COVID-19.
West Texas Intermediate crude for September delivery CL.1, +0.65% CLU20, +0.65% on the New York Mercantile Exchange was up 29 cents, or 0.7%, at $41.58 a barrel. September Brent crude BRN.1, +0.57% BRN00, +1.56%, the global benchmark, rose 20 cents, or 0.5%, to $43.98 a barrel on ICE Futures Europe.
“On the one hand, the risks of a less robust recovery of demand due to coronavirus, and the political tensions between the U.S. and China, are weighing on prices,” said Eugen Weinberg, analyst at Commerzbank, in a note. “And on the other, prices are finding support from the weak U.S. dollar and hopes of further corona aid in the U.S.”
The number of confirmed cases of COVID-19 world-wide climbed above 16.2 million on Monday, according to data aggregated by Johns Hopkins University, and the death toll rose to 648,966. At least 9.4 million people have recovered. The U.S. case tally climbed to 4.23 million and the death toll rose to 146,935.
The dollar, meanwhile, remained under pressure, with the ICE U.S. Dollar Index DXY, -0.66%, which tracks the currency against a basket of six major rivals, sliding to a two-year low. A weaker dollar can be supportive for commodities as it makes them less expensive to users of other currencies.
U.S.-China tensions were on the rise last week, with Beijing ordering the U.S. to close its consulate in the western Chinese city of Chengdu, days after Washington ordered the closure of China’s Houston consulate. Meanwhile, on the domestic front, Senate Republicans were expected Monday to release their proposal for a second round of coronavirus spending, news reports said.
Traders were also watching for any disruptions in the aftermath of Hanna, which hit the South Texas coast as a hurricane over the weekend. The port of Corpus Christi “looks to have been largely spared extensive damage, but nevertheless we can expect some disruption of trade in the near term, although this appears to have had limited impact on crude and product prices,” wrote analysts at JBC Energy, a Vienna-based consulting firm.
