- Brent and WTI contracts fell around $1 a barrel earlier
- Beijing districts close schools as China’s COVID cases rise
- Rising dollar weighs on prices
LONDON, Nov 21 (Reuters) – Oil prices fell on Monday to trade near their lowest level in two months, after falling around $1 a barrel as supply fears faded while concerns about Chinese fuel demand and the strength of the US dollar were weighing on prices.
Brent futures for January had slipped 51 cents, or 0.6%, to $87.11 a barrel by 1205 GMT.
U.S. West Texas Intermediate (WTI) crude futures for December were at $79.86 a barrel, down 22 cents or 0.3%, before the contract expired later Monday. The more active January contract was down 42 cents or 0.5% at $79.69 a barrel.
Both indexes closed Friday at their lowest since September 27, extending losses for a second week, with Brent down 9% and WTI down 10%.
“Apart from the weakening demand outlook due to COVID restrictions in China, a rebound in the US dollar today is also a bearish factor for oil prices,” said CMC Markets analyst Tina Teng.
“Risk sentiment is becoming fragile as all recent economic data from major countries points to a recessionary scenario, particularly in the UK and the eurozone,” she said, adding that hawkish comments from the US Federal Reserve last week also raised concerns about the US economy. prospects.
The number of new COVID cases in China remained near April peaks as the country battles outbreaks nationwide and in major cities. Schools in some districts of the capital Beijing switched to online classes on Monday after authorities asked residents to stay at home, while the southern city of Guangzhou ordered a five-day lockdown for its most populous district.
“The prospect of more restrictions and therefore weaker demand in China has weighed on crude prices recently,” said Craig Erlam, senior market analyst at OANDA.
“We see a gloomy economic outlook around the world that continues to weigh on oil prices and if interest rates continue to rise as they have, expectations are likely to deteriorate further.”
The first-month Brent futures spread narrowed sharply last week as WTI moved into contango, reflecting diminishing supply concerns.
Meanwhile, expectations of further interest rate hikes elsewhere drove the greenback higher, making dollar-denominated commodities more expensive for investors.
Supplementary by Florence Tan and Emily Chow; edited by Kenneth Maxwell and Jason Neely
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