Oil prices remained steady as concerns over surging cases of Covid-19 infections were offset by hopes for more US stimulus.
Efforts of the US to boost its economy from the pandemic have increased hopes for a robust fuel demand.
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Brent crude increased $0.02 to reach $43.43 a barrel at 0423 GMT while the US West Texas Intermediate (WTI) crude fell $0.07 to trade at $41.53, reported Reuters.
Both the Brent and WTI benchmarks rose to as high as 0.5% in the earlier session.
CMC Markets chief market strategist Michael McCarthy was quoted by the news agency as saying: “A weaker US dollar is supporting both base and precious metals, but oil traders appear focused on the economic signal that the lower dollar is flashing – i.e. demand destruction.”
A weaker US currency makes dollar-denominated commodities such as more affordable oil to holders of other currencies because the commodities become cheaper during this time.
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By GlobalDataThe value of the US dollar against six other overseas currencies fell to nearly two-year lows due to a surge in Covid-19 cases in the country.
California and Florida are now reporting more cases than New York, which was earlier the epicentre of the pandemic in the US.
However, losses could be limited by new government aid packages, which in turn could help stimulate the demand for fuel.
AxiCorp market strategist Stephen Innes said: “Oil prices will continue to draw support from the Fed’s dovish policy.”
On 27 July, US Senate Republicans proposed a $1tn Covid-19 aid package to stimulate the country’s economy, expanding unemployment benefits for millions of workers.
Innes added: “For oil prices to break out higher, there must be a significant flattening of the US Sunbelt Covid-19 case count curve at a minimum.”
Meanwhile, investors are awaiting data from the industry groups American Petroleum Institute (API) and the US Energy Information Administration (EIA) that are due to be released on 28 and 29 July, respectively.
