Oil slumps on fears over economic slowdown, stronger dollar

Oil pump cylinders are seen at the Vaca Muerta shale oil and gas field in the Patagonian province of Neuquen, Argentina January 21, 2019. REUTERS/Agustin Marcarian

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  • Dollar hits 5-week high on Fed hawkish remarks
  • China’s Sichuan extends heatwave electricity restrictions – Caixin
  • China lowers lending standards to revive faltering economy
  • Western leaders discuss Iran nuclear deal

LONDON, Aug 22 (Reuters) – Oil prices fell on Monday on fears that aggressive U.S. interest rate hikes could weaken the global economy and fuel demand, while a stronger dollar weighs also.

Brent futures for October settlement fell $1.60, or 1.6%, to $95.12 a barrel at 09:00 GMT.

U.S. West Texas Intermediate (WTI) crude futures for September delivery, which were due to expire on Monday, were down $1.56, or 1.7%, at $89.21 a barrel.

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The most active October contract was at $88.92, down $1.52 or 1.7%.

On Friday, Brent and WTI both climbed for a third straight day, but fell around 1.5% on the week due to a stronger dollar and demand issues.

“Growing fears of a global economic slowdown are driving the slide in oil markets,” said Tatsufumi Okoshi, senior economist at Nomura Securities.

“A higher US dollar also prompted further sales,” he said. A stronger dollar makes oil more expensive for buyers of other currencies.

The dollar index hit a five-week high on Monday after Richmond Fed Chairman Thomas Barkin said central bankers were inclined towards faster and faster interest rate increases. Read more

Investors will pay close attention to comments from Fed Chairman Jerome Powell when he addresses an annual conference of global central banks in Jackson Hole, Wyoming on Friday.

Read more

Prices also fell on concerns about slowing fuel demand in China, the world’s biggest oil importer, partly due to a power crisis in the southwest caused by a wave of heat.

Sichuan province will extend restrictions on industrial power consumers until August 25 as it tries to cope with declining hydropower generation and rising household power demand, it said. the Caixin financial information service. Read more

In a sign of general concern about the Chinese economy, Beijing on Monday lowered its benchmark lending rate and lowered the mortgage benchmark by a larger margin, adding to the easing measures announced last week, to revive a economy hampered by a real estate crisis and a resurgence of covid cases. Read more

Meanwhile, the leaders of the United States, Britain, France and Germany discussed efforts to revive the 2015 Iran nuclear deal, the White House said on Sunday, which could release sanctioned Iranian oil to the markets. Read more

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Additional reporting by Yuka Obayashi; edited by Christian Schmollinger and Jason Neely

Our standards: The Thomson Reuters Trust Principles.

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