Crude futures rallied more than $63 Monday, extending last week's gains on the heels of more positive economic news and a weakening dollar.
Lifted by soaring equities, oil prices are steadily on the rebound since plunging more than 10% from June's peak of $73.38, the highest intraday front-month crude oil price since October 2008.
Edging toward $65 during early trading, light, sweet crude for August delivery settled at $63.98, 42 cents higher than Friday's close. The August crude oil contract is set to expire on Tuesday.
Continuing to rally ahead of the U.S. benchmark, London Brent for September traded more than $65 per barrel on the ICE Futures exchange.
Also rising, front-month August reformulated gasoline blendstock settled higher at $1.79 a gallon, while August heating oil climbed to $1.69 a gallon.
"[Today's oil price] is mostly continued follow-through after last week's rally. Economic optimism fueling stronger equities and the weaker dollar are supporting commodity markets," Tom Bentz, analyst at BNP Paribas Commoditiy Futures Inc., told Reuters.
Further affecting the price per barrel of crude, the dollar fell to a six-week low against the euro today.
Bill O'Grady, chief markets strategist at St. Louis-based Confluence Investment Management, noted that "the primary, most important factor" affecting today's crude price rally had to do with rising commodities in general coupled with the dollar's decline against major currencies.
"When equities rise, the dollar tends to weaken," O'Grady explained.
The greenback's downward spiral has helped contribute to the recent trend in rising oil prices, which O'Grady believes will continue.
Although he did not pinpoint an exact target price where crude will eventually settle for the remainder of the week, the analyst expects prices to stay within the low to mid-$60 range.
China Fires Up Rates, Market Optimism Returns
According to Asiaport Daily News, China's oil refineries have experienced increased operating rates as a result of a growing amount of refined oil output.
About 11.93 million tons of deisel oil, 5.94 million tons of gasoline and 1.3 million tons of kerosene were separately produced in June, a rise of 3%, 14% and 40%, respectively, from the previous year.
O'Grady sees this boost in China's utilization rate as the main fundamental that spurred today's crude price.
"The only fundamental today was a report on Chinese refinery utilization showing that the rate has increased to a 16-month high, which indicates that product demand is rising," O'Grady said.
Moreover, O'Grady thinks that the market's earnings estimates for the quarter were "too pessimistic," considering recent reports from U.S. companies citing better-than-expected results, which have encouraged investors to return to riskier markets.
Additionally, the tropical wave in the Central Atlantic, which contributed to oil's rally ahead of last weekend, is now reported to have less than a 30% chance of developing into a tropical cyclone over the next 48 hours, according to a forecast by the U.S. National Hurricane Center.
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