Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Oil prices slide $2/bbl; settle at 9-month lows on dollar strength

Published 26/09/2022, 02:35
Updated 26/09/2022, 20:26
© Reuters. FILE PHOTO: Model of Oil barrels are seen in front of rising stock graph in this illustration, July 24, 2022. REUTERS/Dado Ruvic/Illustration

© Reuters. FILE PHOTO: Model of Oil barrels are seen in front of rising stock graph in this illustration, July 24, 2022. REUTERS/Dado Ruvic/Illustration

By Laura Sanicola

(Reuters) - Oil prices fell $2 a barrel on Monday, settling at nine-month lows in choppy trade, pressured by a strengthening dollar as market participants awaited details on new sanctions on Russia.

Brent crude futures for November settled down $2.09, or 2.4%, to $84.06 a barrel, plunging below levels reached on January 14.

U.S. West Texas Intermediate (WTI) crude for November delivery dropped by $2.06, or 2.3% to $76.71, the lowest since Jan. 6.

Both contracts had risen early in the session after slumping about 5% on Friday.

{{2126|The dodollar index hit a two-decade high, pressuring demand for oil which is priced in the U.S. currency. The impact of a strong dollar on oil prices is at its most pronounced in more than a year, Refinitiv Eikon data shows.

"It's hard for anyone to expect oil will recover in the wake of a greenback this expensive," said Bob Yawger, director of energy futures at Mizuho.

Disruption from the Russia-Ukraine war also hit the oil market, with European Union sanctions banning Russian crude set to start in December along with a plan by G7 countries for a Russian oil price cap looking set to tighten supply.

GRAPHIC - Strong greenback weighing on oil prices

https://graphics.reuters.com/OIL-DOLLAR/xmvjozgjopr/chart.png

Interest rate increases by central banks in numerous oil-consuming countries have raised fears of an economic slowdown that could squeeze oil demand.

"With more and more central banks being forced to take extraordinary measures no matter the cost to the economy, demand is going to take a hit which could help rebalance the oil market," said Craig Erlam, senior market analyst at Oanda in London.

Attention is turning to what the Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia, together known as OPEC+, will do when they meet on Oct. 5, having agreed at their previous meeting to cut output modestly.

However, OPEC+ is producing well below its targeted output, meaning that a further cut may not have much impact on supply.

© Reuters. FILE PHOTO: Model of Oil barrels are seen in front of rising stock graph in this illustration, July 24, 2022. REUTERS/Dado Ruvic/Illustration

"Odds would appear quite high for a downward adjustment in production by the OPEC + organization," said Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Illinois.

Data last week showed OPEC+ missed its target by 3.58 million barrels per day in August, a bigger shortfall than in July.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.