Oil prices dipped on Monday due to the rising value of the US dollar and persistent market concerns over China’s sluggish economy.
International benchmark Brent crude traded at $85.75 per barrel at 09.25 a.m. local time (0625 GMT), a 1.22% loss from the closing price on Friday of $86.81 per barrel.
The American benchmark West Texas Intermediate (WTI) traded at the same time at $82.17 per barrel, down 1.22% from the session close of $83.19 per barrel on Friday.
Both benchmarks started the week with significant losses but remained at multi-month highs. The rising value of the US dollar as well as emerging bearish data from China, the world’s largest crude oil importing country, were important reasons driving the price declines.
The US dollar index, which measures the value of the American dollar against a basket of currencies, including the Japanese yen, British pound, Canadian dollar, Swedish krona, and Swiss franc, increased 0.10% to 102.79, the highest level of the past 30 days.
Investors are still betting on China’s weak industrial data, which reflects the fragility of the country’s economic recovery.
The top global importer of crude oil, iron, steel, copper, and coal saw declines in these imports during the first seven months of the year.
Furthermore, higher-than-expected annual consumer inflation in the US, the world’s largest oil consumer, keeps oil prices under pressure by raising inflationary concerns as well as the prospect of another interest rate hike.
According to experts, the July producer inflation report, which revealed that the US Federal Reserve (Fed) is not yet ready to declare triumph in its fight against inflation, also laid the groundwork for the Fed to make a new interest rate hike decision.
Investors are now anticipating the release of the Fed’s formal comments and minutes from its June 13–14 Federal Open Market Committee meeting, which will be made public on Wednesday.
