Crude Oil Prices Jump 2% Due to Weak Dollar, Supply Concerns

Crude oil prices increased over 2 percent as a weak dollar and supply concerns offset the impact of ongoing fears of a global recession and rising covid cases in China.

On the Intercontinental Exchange, the September contract of Brent was at $103.59 a barrel, higher by 2.40 percent from its previous close. The August contract of West Texas Intermediate (WTI) on the NYMEX rose 2.20 percent to $99.74 per barrel.

The dollar index, which slipped from 20-year highs supported global commodities at lower levels and is likely to remain volatile for the rest of this week according to market analysts.

Rising covid cases in China, prospects of fresh lockdowns, and anticipation of a global recession weighed heavily on the prices last week. The country is one of the largest importers of oil and widespread Covid-related restrictions would severely impact oil demand from the country.

Due to the volatility in the global oil prices, the domestic retail prices of petrol, diesel, and kerosene in Kenya have been on an upward trend since February 2022.

As of July 2022, the price of Super Petrol is at 159.12 per liter, diesel at 140 shillings per liter while kerosene is retailing at 127.94 shillings per liter.

In a move to eliminate another fuel hike as Kenyans grapple with the rising cost of other essential goods, the government has authorized the spending of some 16.67 billion shillings to retain current retail fuel prices for another 30 days.

Meanwhile, the cost of cooking oil, one of Kenya’s most expensive essential commodities now, could ease towards the end of July after a correction in the prices of crude and palm oil in the global market

Crude palm prices have dropped from an average of 247,842 shillings per ton in June to 115,941 shillings in July 2022.

The Kenya National Bureau of Statistics (KNBS) data indicated a liter of cooking oil had increased to 387.98 shillings in June, 51.7 percent compared to 225.83 shillings in June 2021.

A spot check by Soko Directory, however, shows that some brands are currently selling as high as 430 shillings per liter in the local retail space.

Prices of detergent have also increased 19 percent according to KNBS, with a 500 grams product averaging 198.06, up from 165.59 shillings.

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