The Weak US Dollar is Supporting Oil Prices, Says Hari

Vandana Hari, the founder of Vanda Insights an energy consultancy, has said the weak United States dollar is aiding global oil prices as he does not see any fundamentals to move prices up or down at the moment.

“As far as fundamentals are concerned, there is really not much to move oil around either way, which is why we have seen it pretty range bound, but within that continuing to grind higher because of a weaker dollar,” Hari, stated. “That’s been the only support, I would say.”

Just like most commodities, oil price is denominated in US dollars. Therefore, a weaker greenback tends to support prices.

He said the US dollar is likely to remain weak through 2021 as it would be in the interest of the world’s largest economy to keep the currency lower in order to sustain exports and new job creation. This, Hari said would continue to support crude oil prices.

Similarly, he said President Trump’s efforts “to keep the U.S. stock markets buoyant” will also help, said Hari. That would include lots of monetary and fiscal stimulus and positive news on a coronavirus vaccine.

“These measures will keep risk-on trade, it will keep sentiment quite buoyant in larger global financial markets,” said Hari. “To some extent, I think it will support sentiment in oil, it will prop up oil.”