Oil prices edged higher on Monday as investors watched out for the short-term demand outlook amid the rising cases of COVID-19 in some regions. In contrast, a rising dollar reduced the appeal of commodities priced in the currency.
Brent was up 2 cents at $62.97 a barrel by 0510 GMT, rising to as high as $63.30.
U.S. crude gained 1 cent to $59.49 a barrel after rising as much as 46 cents earlier.
Analyst said currently, the market lacks direction as they are waiting for a breakout of the current range.
Effect of COVID-19 on Oil Prices
The rising cases of COVID-19 remain a threat to the future of oil prices as India and parts of Asia have been recording high cases of the third wave of COVID-19.
Meanwhile, in the US, cases of COVID-19 have been declining due to the high rate of vaccination that has seen more than 70 million people being vaccinated. The US Fed Jerome Powell said the economy was bound to grow stronger despite the prevailing COVID-19 giving investors hope.
The U.S. economy is at an “inflation point” amid expectations that growth and hiring will accelerate in the months ahead, but faces the risk of reopening too quickly and sparking a resurgence in coronavirus cases” Federal Reserve Chair Jerome Powell
He further said the risk of opening the economy too fast was that people would go back to their normal lives, which might see them record new cases of re-infection.
Despite the steps taken to curb the spread of the COVID-19, it remains a threat to oil prices as more countries are enforcing lockdowns, including halting global travel even as summer approaches.
The market is also facing rising supply after the OPEC+ alliance agreed to add more barrels from May. However, Saudi Arabia’s energy minister said the decision to boost output was the right move.
Iran has been unpredictable as talks between the OPEC producer and world powers on resuscitating a 2015 nuclear accord are set to continue this week after an initial round of discussions, described by a senior US official as a good first step but still short of what’s necessary for a revival of the deal.