Oil Prices Advance on Fed Rate Hike Jitters

Oil prices rose in Asian morning trade on Monday, as investors remained concerned about the possibility of future US interest rate hikes, despite a recovery in Chinese demand and a weaker dollar.

Brent crude futures gained 24 cents, or 0.29%, to US$83.02 per barrel by 12.04 hrs. (Thai time). West Texas Intermediate crude futures (WTI) rose by 23 cents, or 0.30%, to US$76.91 a barrel.

Analysts from ANZ Bank noted on Monday morning that market sentiment was fragile due to concerns about further monetary tightening by the Fed and rising crude oil stockpiles in the US.

Oil prices were supported by a weakening dollar, which makes oil more affordable for those with foreign currencies.

The dollar has been under pressure since the end of last week, when a selloff in U.S. assets began in response to the collapse of Silicon Valley Bank and Signature Bank and fears of a domino effect.

Some more support came on Sunday from comments made by Saudi Aramco CEO Amin Nasser regarding Chinese demand for crude.

“If you considered China opening up and a pick up in jet fuels and very limited spare capacity, we are talking 2 million barrels, so as I said we are cautiously optimistic in the short to midterm and the market will remain tightly balanced,” he said.

These remarks follow the news that Riyadh and Tehran had agreed to restore diplomatic ties in a China-brokered arrangement, which might lead to the resumption of a nuclear deal that would allow the sale of currently sanctioned Iranian crude.