Oil Up Over 1% as Weaker Dollar Outweighs China Covid-19 fears

Oil prices gained more than 1% on Tuesday, reversing earlier session losses, as a weaker US dollar offset widening Covid-19 curbs in China, which have spurred concerns about declining fuel demand in the world’s second-largest oil importer.

As of 15.50 hrs. (Thai time), Brent crude for January delivery rose US$1.45, or 1.56%, to US$94.26 a barrel. The December contract expired on Monday at US$94.83 a barrel, down 1%.

U.S. West Texas Intermediate (WTI) crude added US$1.28, or 1.48%, to $87.81 a barrel, after falling 1.6% in the previous session.

Both the Brent and WTI benchmarks ended October higher, marking their first monthly gains since May, after the Organization of Petroleum Exporting Countries and its allies, including Russia, announced a 2 million barrel per day cut in output.

On Tuesday, the dollar dropped from a one-week high against a basket of global peers as investors awaited the statement from Fed officials at Wednesday’s policy meeting.

As a result, oil becomes cheaper for those using currencies other than the dollar, and a falling greenback is often a sign that investors are more willing to take on risk.