Investing.com– Oil prices rose to a more-than-two-month high in Asian trade on Monday as traders looked to improving demand in top importer China, although strength in the dollar stymied any major gains.
Crude prices clocked two straight weeks of gains on hopes of improving demand in China, especially as Beijing prepares to unlock more stimulus measures in the coming months.
Colder weather in the U.S. and Europe is also expected to help boost oil demand, especially for distillates.
But strength in the dollar limited any major gains in crude, as the greenback hit more than two-year highs before a string of key economic readings this week.
Brent oil futures expiring in March rose 0.2% to $76.63 a barrel, while West Texas Intermediate crude futures rose 0.2% to $73.36 a barrel by 20:11 ET (01:11 GMT).
Cold weather, China stimulus spur demand hopes
Cold weather across the U.S. and Europe is expected to spur increased demand for heating oil, potentially tightening supplies in both regions.
Snow, ice and sub-zero temperatures are expected across swathes of the U.S. as a powerful winter storm sweeps through the country.
The storm is driven by a polar vortex, which is also expected to drop temperatures across Europe.
In China, traders are positioning for more stimulus measures from Beijing, amid persistent signs of economic weakness in the country. Inflation data due later this week is also expected to provide more cues on the world’s biggest oil importer.
Dollar strong with key data, rate cuts in focus
Oil prices were pressured by strength in the dollar, which surged to an over two-year high last week amid growing conviction that the Federal Reserve will cut interest rates at a slower pace in 2025.
Two Fed officials doubled down on the central bank’s recent warning that the flight against inflation was not over, spurring increased caution that rates will remain relatively high for longer.
Their comments saw focus shift squarely to a slew of key economic readings due this week, most notably nonfarm payrolls data for December, which is due on Friday.
Protectionist policies under incoming President Donald Trump are also expected to buoy the greenback. A stronger dollar pressures oil demand by making crude more expensive for international buyers.
