(MENAFN- Trend News Agency)
Oil prices fell for a second day on Monday on fears of lower
fuel demand from an expected global recession sparked by rising
worldwide interest rates and as a surging U.S. dollar limits the
ability of non-dollar consumers to purchase crude, Trend reports with reference
to Reuters .
Brent crude futures for November settlement slipped 54 cents, or
0.63%, to $85.61 a barrel at 0511 GMT. U.S. West Texas Intermediate
(WTI) crude futures for November delivery dropped 48 cents, or
0.61%, to $78.26.
Both contracts slumped around 5% on Friday to their lowest since
The dollar index that measures the greenback against a basket of
major currencies climbed to a 20-year high on Monday.
A stronger greenback tends to curtail demand for
dollar-denominated oil since buyers using other currencies must
spend more to buy crude.
Central banks in numerous oil-consuming countries, including the
United States, the world's biggest crude user, have raised interest
rates to fight surging inflation which has led to concerns the
tightening could trigger an economic slowdown.
'A backdrop of global monetary policy tightening by the key
central banks to quell elevated inflation, and a splendid run-up in
the greenback towards more than two-decade highs has raised
concerns about an economic slowdown and is acting as a key headwind
for crude prices,' said Sugandha Sachdeva, vice president of
commodity research at Religare Broking.
Sachdeva expects WTI prices could find a floor at $75 a barrel,
while for Brent $80 will act as a cushion.
The chief executive officer of energy trader Vitol, Russell
Hardy, said that fuel shipments are being affected with Russian oil
products expected to flow to Asia and the Middle East while
supplies from their go to Europe.
Additionally, Hardy told an oil conference in Singapore that
more than a million barrels per day (bpd) of U.S. crude is expected
to go to Europe to fill the gap in Russian supplies.
The head of Colombian state energy company Ecopetrol said at the
same conference that it has been selling more oil to Europe,
replacing Russian supplies, while it sees growing competition for
market share in Asia.
Attention is turning to what the Organization of the Petroleum
Exporting Countries (OPEC) and allies led by Russia, together
called OPEC+, may do when they meet on Oct. 5, after agreeing to
cut output modestly at their last meeting.
But, since OPEC+ is producing well below its targeted output,
any announced cut may not have much impact on supply.
Data last week showed OPEC+ missed its target by 3.58 million
bpd in August, a bigger shortfall than in July.
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