Oil Prices Fall Further Amid Strong Dollar

15 Jul 2024 , 08:29 AM

Oil prices fell for the second day on Monday as the dollar gained ground amid political uncertainty in the United States following an attack on presidential candidate Donald Trump, while investors watched the status of Gaza ceasefire talks.

Brent crude futures slid 55 cents, or 0.7%, to $84.48 a barrel, after falling 37 cents on Friday.

The price of US West Texas Intermediate crude fell 56 cents, or 0.7%, to $81.65 a barrel.

The dollar rose on Monday, but U.S. bond futures fell as investors bet that Trump’s attacks would increase his chances of winning the 2017 presidential election.

A stronger dollar tends to depress oil prices because buyers using foreign currencies must pay more for dollar-denominated petroleum.

Last week, Brent sank more than 1.7% after four weeks of increases, while WTI futures dipped 1.1% as poor oil demand in China, the world’s largest importer, offset solid summer consumption in the United States.

China’s crude oil imports declined 2.3% to 11.05 million barrels per day in the first half of the year, owing to disappointing fuel consumption and independent refiners cutting production due to low profit margins.

The country is scheduled to report data on Monday indicating that its economy likely slowed in the second quarter as a prolonged housing slowdown and job instability impacted on domestic demand, fueling anticipation that Beijing will need to unleash more stimulus.

In the Middle East, talks between Israel and Hamas to end the Gaza conflict stalled on Saturday after three days, however a Hamas official claimed on Sunday that the group had not withdrawn from the talks. At the same time, an Israeli attack on the group’s military chief killed 90 individuals on Saturday.

The uncertainty surrounding the unpredictable scenario has kept the geopolitical premium in oil high.

The number of active oil rigs in the United States decreased by one last week to 478, the lowest level since December 2021, according to energy services firm Baker Hughes.

Nonetheless, oil markets remain widely supported by OPEC+ supply restrictions, with Iraq’s oil ministry stating that it will compensate for any excess oil output from the beginning of 2024.

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