Crude Oil Rises; Biden's Saudi Arabia Trip Failed to Increase Production

Oil prices rose on Friday as President Joe Biden's visit to Saudi Arabia did not result in any promises to increase supply, but the expectation of widespread lockdowns against COVID-19 in China may limit demand.

As of 09:30 ET (1330 GMT), US crude oil futures were trading up 4.5% at $ 98.86 a barrel, while the Brent contract rose 4.4% to $ 105.64. US Gasoline RBOB Futures rose 3.7% to $3.3325 per gallon. Biden's trip to Saudi Arabia did not result in any commitment from the largest OPEC producer to increase oil supplies, as was widely expected after officials had previously signaled that this would be the case. However, prices still rose after Saudi Arabia's Foreign Minister Prince Faisal bin Farhan Al Saud said that the oil issue was not discussed at the US-Arab summit on Saturday and that the OPEC+ forum remains the vehicle through which the kingdom conducts its oil production policy. "The next OPEC+ meeting is on August 3," ING analysts said in a note. "However, apart from Saudi Arabia and the UAE, there is little in terms of spare capacity among producers." Another issue potentially affecting supply this week is the resumption of Russian gas flows to Europe via the Nord Stream 1 pipeline, which is scheduled to come out of maintenance on Thursday. Fears are growing that Russia will choose to extend the shutdown as a political ploy due to the war in Ukraine, which could provide support for Brent crude, especially as Germany seeks additional energy sources. Also helping crude oil prices on Monday was the US dollar's retreat from multi-year highs, as a weaker dollar makes dollar-denominated commodities more affordable for holders of other currencies. Still, both benchmarks posted their biggest weekly declines in nearly a month last week on concerns that aggressive monetary tightening by central banks around the world, led by the US Federal Reserve, will lead to a sharp slowdown in economic growth, hitting oil demand. China also reported 510 cases on Sunday, the highest since May 23, after infections rose to 580 on Saturday. This prompted Shanghai to launch mass tests in some areas, raising fears that the world's largest crude oil importer will again be forced into economically damaging widespread curfews. Data released last week showed that China's daily crude oil imports in June fell to the lowest level since July 2018.