Oil extends gains on strong demand in the US and China

Oil prices rose in European trade for the third straight session on hopes for improving demand on fuel in the US and China.

Prices are also buoyed by the tumble in dollar against major rivals, underpinning demand on commodities and metals. 

US crude rose 1.3% to $111.91 an ounce, while Brent rose 1.4% to $114.26 a barrel.

US crude rose 0.9% on Friday, while Brent added 1.1%, the second profit in a row on hopes for rising Chinese demand.

US Demand

US demand is mounting as the driving season peaks soon, while refineries prepare for the increased consumption rates.

Chinese Economy

China is starting to loosen up restrictions on movements in major cities as Covid 19 infections decline, while China's central bank took a bold move and cut interest rates to bolster economic activities.

Shanghai, a 25 million people city, is preparing to return to normal life by June 1.

Otherwise, the People's Bank of China cut five-year interest rates for loans by 15 basis points to 4.45%, the largest such decrease since 2019.

US Dollar

The dollar index shed over 0.9% to 102.07, the lowest since April 26, after closing up 0.15% on Friday, following a 1% tumble on Thursday, the heftiest loss since March 9.

The dollar index fell 1.4% last week, the first loss in seven weeks, and the largest since late January.

Investors now don't expect the greenback to achieve further gains as all Fed rate hikes are mostly priced in already.