Crude oil futures closed higher Monday (July 18) on a weaker dollar. This was compounded by expectations that the Federal Reserve (Fed) will not raise interest rates by 1% at its meeting this month.
- WTI crude futures rose $5.01, or 5.1%, at $102.60 a barrel.
- BRENT crude futures rose $5.11, or 5.1%, at $106.27 a barrel.
Crude oil contracts benefited from the depreciation of the dollar. The dollar index against the six major currencies in a basket of currencies fell 0.64% to 107.3660.
The market was also driven by expectations that the Fed will not raise rates as much as 1% at its July 26-27 meeting, after senior Fed officials endorsed a rate hike of just 0.75% at their meeting the same day.
The price continues to benefit from tight oil supplies after U.S. President Joe Biden failed to persuade OPEC members to increase production to slow the rise in oil prices following his visit to Saudi Arabia last week.
As Europe prepares for an energy crisis, markets are watching to see if Russia will resume natural gas deliveries through the Nord Stream 1 pipeline after July 21. Nord Stream AG announced the closure of the Nord Stream 1 pipeline from July 12 to avoid further losses as maintenance work continues until July 21. Nord Stream 1 is a natural gas pipeline that runs from Russia to Germany via the Baltic Sea.
The Federal Network Agency, Germany’s energy regulator, expects Russia to continue suspending natural gas supplies to Europe even after maintenance work on Nord Stream 1 is completed on July 21.
In the event of an energy crisis in Europe, the German government will raise its energy emergency to level 3, the highest level. In this case, gas supplies will be distributed to consumers in advance instead of to businesses.
The Spot Market is Open
Tuesday, July 19, 2022