After seven weeks of increases fueled by tightened supply as a result of OPEC+ cuts, oil prices fell by nearly 1% on Monday amid worries about China’s sputtering economic recovery and a stronger dollar.
By 12:37 GMT, Brent crude futures were down 93 cents, or roughly 1.1%, to $86.46 per barrel, while West Texas Intermediate crude in the United States was down $1.03, or roughly 1.2%, to $82.81 per barrel.
“Crude has been defying forecasts of a correction and has been in overbought territory for some time. The growing stronger headwinds blowing in the eurozone and China have been completely ignored in favor of the U.S. economic optimism, according to Vandana Hari, founder of oil market monitoring company Vanda Insights.
Prices may be impacted by China’s slow economic recovery and a stronger U.S. dollar, but OPEC+ has stated it will take all necessary steps to reduce supply and stabilize markets, according to CMC Markets analyst Tina Teng.
The U.S. dollar index increased after slightly higher producer prices in the country in July boosted Treasury yields, defying predictions that the Federal Reserve would soon stop raising interest rates.
Since buyers who use foreign currencies must pay more for oil, a higher dollar reduces demand.
The International Energy Agency stated in its monthly report on Friday that supply reductions by Saudi Arabia and Russia, two members of the Organisation of the Petroleum Exporting Countries and their Allies, or OPEC+, are anticipated to deplete oil inventories over the course of this year and potentially push prices even higher.
According to Tamas Varga of oil trader PVM, last week’s positive demand estimates, lowering OPEC supply, declining stocks, and reduced inflationary pressure “is a warning signal that unless China joins the party the path upward will be paved with pitfalls.”
A Shell representative stated in a separate statement on Monday that exports of Nigeria’s Forcados crude oil started up again on Sunday, about a month after loadings of the medium sweet grade were halted due to a probable leak.
According to a Reuters survey, the halt of Forcados loadings made Nigeria the second-largest contributor to the decline in OPEC crude oil output in July.
Nigeria became the second-largest contributor to the decline in OPEC crude oil output in July as a result of the suspension of Forcados loadings, according to a Reuters survey.
The bullish channel’s support line was broken once more by the price of crude oil, which has since settled below it. This confirms the likelihood that the bearish trend will continue in the coming sessions and also serves as a reminder that holding below 83.60 is necessary to reach our projected goal price of 80.65.
Bottom Line
Oil prices fell by almost 1% on Monday as concerns about China’s faltering economic recovery and a stronger currency weighed on the market after seven weeks of advances driven by reduced supply as a result of OPEC+ cuts.
