Oil fell in Asia as the dollar strengthened, worried about Chinese demand

Oil prices were weak in early Asian trade on Monday morning, weighed down by worries about China’s faltering economic recovery and a stronger dollar, after seven straight weeks of gains supported by tighter supply resulting from OPEC+ production cuts.

Brent crude futures shed 29 cents, or 0.3 percent, to trade at $86.52 a barrel by 0033 GMT. Meanwhile, US West Texas Intermediate (WTI) crude was trading at $82.95 per barrel, down 24 cents, or 0.3 percent.

Oil prices slipped as the US dollar index extended gains on Monday after a slightly larger-than-expected rise in US producer prices in July lifted government bond yields despite expectations that the Federal Reserve is on the verge of raising interest rates.

Oil may trade in tight ranges this week as China’s sluggish economic recovery and a stronger US dollar could weigh on prices, but OPEC+ will do whatever it takes to keep supply tight and stabilize the market, said CMC Markets analyst Tina Teng.

Supply cuts by Saudi Arabia and Russia, part of an alliance between the Organization of the Petroleum Exporting Countries and allies, or OPEC+, are expected to erode oil inventories in the remainder of the year, potentially pushing prices even higher, the International Energy Agency (IEA) said in a report. monthly on Friday (11/8/2023).

Reflecting the tight supply, the Brent price spread between the first and second months held steady on Monday after settling at 67 cents on Friday (11/8/2023), its widest since March.

A Russian warship fired warning shots at a cargo ship in the Black Sea on Sunday (13/8/2023), increasing tensions in a key area for the export of commodities from Ukraine and Russia.

“Escalating tensions between Russia and Ukraine have raised prospects for trade disruptions in the Black Sea,” ANZ analysts said in a note, adding that Black Sea handles around 15%-20% of the oil Russia sells.

In the US, the number of operating oil rigs held steady at 525 last week, after falling for eight straight weeks, according to the weekly Baker Hughes report.

NAIS

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