Oil prices fell about 2% on Monday to a three-week low as a higher-priced Brent contract expired, the U.S. dollar strengthened and traders took profits, concerned about forecasts of rising crude supplies and pressure on demand from high interest rates.
On its first day as the front-month, Brent futures for December delivery fell to $90.78 a barrel by 11:24 a.m. EDT (1524 GMT), down $1.42, or 1.5%, from Friday’s close and also down about 4% from where the November future closed on Friday when it was still the front-month. That was the Brent front-month’s biggest daily percentage decline since late May.
U.S. West Texas Intermediate (WTI) crude fell $1.90, or 2.1%, to $88.89 per barrel.
Both benchmarks were headed for their third daily decline and their lowest settlements since mid-September.
Energy analysts cited profit taking after crude prices rose nearly 30% in the third quarter to 10-month highs. As of late last week, U.S. speculators had boosted their net long futures and options position on the New York Mercantile and Intercontinental Exchanges to the highest since May 2022, according to the U.S. Commodity Futures Trading Commission.
On Monday, the U.S. dollar rose to a 10-month high against a basket of other currencies on the view that U.S. interest rates could stay higher for longer, which could slow economic growth and reduce oil demand. A stronger dollar also makes oil more expensive for holders of other currencies.
The market was waiting for comments from U.S. Federal Reserve (Fed) Chair Jerome Powell to gauge the central bank’s interest-rate path. U.S. Treasury yields rose on Monday as an agreement to avert a partial government shutdown reduced demand for the debt before key jobs data due later this week.
Pumping more crude supply into the system, Turkey’s energy minister said the country will restart operations this week on a pipeline from Iraq that has been suspended for about six months.
Additionally, Saudi Arabia could start to ease its additional voluntary supply cut of 1 million barrels per day (bpd), ING analysts said in a note.
OPEC+, the Organization of the Petroleum Exporting Countries (OPEC) with Russia and other allies, meets on Wednesday but is unlikely to tweak its current oil output policy.
A Reuters survey showed OPEC oil output rose for a second straight month in September despite cuts by Saudi Arabia.
In Europe, manufacturing data showed the euro zone, Germany and Britain remained mired in a downturn in September, pressuring oil demand.
The World Bank maintained its forecast for China’s 2023 economic growth at 5.1%, but trimmed its prediction for 2024, citing persistent weakness of its property sector. China is the world’s biggest oil importer.
Source : Reuters
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