NEW YORK: Oil prices edged up to a 12-week high on Monday as a winter storm boosted demand for energy to heat US homes and businesses, and on support from a weaker US dollar and expectations of tighter sanctions on Iranian and Russian oil exports.
Brent futures rose 27 cents, or 0.4%, to $76.78 a barrel by 11:33 a.m. EST (1633 GMT), while US West Texas Intermediate crude rose 27 cents, or 0.4%, to $74.23.
Both crude benchmarks gained for a sixth-straight day with Brent on track for its highest close since Oct. 14 and WTI on track for its highest close since Oct. 11.
Brent and WTI remained in technically overbought territory for a third day in a row on forecasts for colder weather and more heating demand in the northern hemisphere and more fiscal stimulus to revitalise China’s faltering economy.
With interest in energy trade growing in recent weeks, open interest in WTI futures on the New York Mercantile Exchange soared to 1.933 million contracts on Jan. 3, the most since June 2023.
In the world’s biggest economy, a winter storm marching across much of the US boosted heating demand, causing natural gas futures to spike by as much as 10% earlier on Monday, while diesel futures were on track for their highest close in 13 weeks.
The US dollar slumped by 1% against a basket of other currencies earlier on Monday following a newspaper report that President-elect Donald Trump was mulling tariffs that would only be applied to critical imports, potentially a relief for countries that were expecting broader levies.
The dollar, however, pared some of its earlier losses against the other currencies after Trump denied the newspaper report.
A weaker US currency makes dollar-priced commodities such as oil cheaper for buyers using other currencies.
In China, the world’s second-biggest economy, the yuan ended the domestic session at its weakest level in 16 months against the US dollar, weighed down by trade concerns.
In a sign of firmer demand expectations, Saudi Aramco, the world’s top oil exporter, raised crude prices for Asian buyers in February for the first time in three months.
But in Germany, Europe’s biggest economy, annual inflation rose more than forecast in December due to higher food prices and a smaller drop in energy prices than in previous months.
To combat higher inflation, central banks usually boost interest rates, which can slow economic growth and demand for energy.
On the supply front, stronger Western sanctions on Iranian and Russian oil shipments are a possibility.
The Biden administration plans to impose more sanctions on Russia over its war on Ukraine, taking aim at its oil revenues with action against tankers carrying Russian crude.
Goldman Sachs expects Iranian oil production and exports to fall by the second quarter due to expected policy changes and tighter sanctions from the incoming Trump administration.
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