Oil prices have inched higher due to a weaker dollar in the wake of continuing concerns over the recovery of the US economy, which has been hit by an increase in coronavirus (Covid-19) cases.
Brent crude rose $0.31, or 0.7%, to reach at $43.25 a barrel by 08:31 GMT, while the US West Texas Intermediate (WTI) crude futures increased by $0.26, or 0.6%, trading at $40.18 a barrel, Reuters reported.
According to the news agency, the Brent benchmark is on track for a fourth consecutive month of increases while the US crude is heading towards the third month of gains.
However, the threat to fuel demand is also looming due to a surge in the second wave of global Covid-19 infections.
CMC Markets chief strategist Michael McCarthy was quoted by the news agency as saying: “The equilibrium price may be lower.
“Now that we have dealt with the issues around the OPEC+ grouping, we know what’s happening there, the key issue for oil markets is demand destruction.”
The Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, agreed to increase production from 1 August this year. This will see the group add around 1.5 million barrels per day (Mbpd) to global oil supply until the end of this year.
According to Reuters polls of more than 500 economists, the global economic outlook has faded again as the increase in Covid-19 cases is giving rise to renewed lockdowns.
The US gross domestic product (GDP) fell at a 32.9% annualised rate last quarter. This is the biggest decline so far since the government started keeping the records in 1947.