A poster with crude oil written on the side of a storage tank in the Permian Basin in Menton, Loving County, Texas, United States, November 22, 2019. REUTERS/Angus Mordant

LONDON (Reuters) – Oil prices extended gains on Monday, supported by a weak dollar and tight supplies, which offset fears about a recession and the possibility of a widespread COVID-19 shutdown in China, which once again slashed fuel demand.

Brent crude futures for September settlement rose $2.44, or 2.4 percent, to $103.60 a barrel by 0900 GMT, after rising 2.1 percent on Friday.

US West Texas Intermediate crude futures for August delivery increased $2.17, or 2.2%, to $99.76, after rising 1.9% in the previous session.

U.S. dollar

Last week, Brent and West Texas recorded their biggest weekly declines in about a month amid fears of a recession that could affect oil demand. Mass COVID testing exercises continue in parts of China this week, raising concerns about oil demand from the world’s second-largest oil consumer. Read more

However, oil supplies are still scarce. As expected, US President Joe Biden’s trip to Saudi Arabia failed to achieve any pledge from the largest producer in the Organization of the Petroleum Exporting Countries (OPEC) to increase the supply of oil. Read more

Biden wants Gulf oil producers to increase production to help lower oil prices and lower inflation. Read more

Global markets are focused this week on resuming the flow of Russian gas to Europe via the Nord Stream 1 pipeline, whose maintenance is scheduled to end on July 21. Governments, markets and businesses fear the possibility of extending the lockdown due to the war in Ukraine. Read more

“Brent crude will find support at the end of the week if Russia does not return gas to Germany after Nord Stream 1 maintenance,” said Jeffrey Halley, chief analyst at OANDA.

Losing this gas to Germany, the world’s fourth largest economy, would hit it hard and increase the risk of a recession.

(Noah Browning reports) Additional reporting by Sonali Paul in Melbourne and Florence Tan in Singapore Editing by David Goodman

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