Oil prices decline due to China demand worries and a stronger dollar

14 Aug 2023 , 10:06 AM

After seven weeks in a row of increases driven by OPEC+ output curbs, oil prices dipped on Monday as worries about China’s sluggish economic rebound and a stronger dollar weighed.

Brent crude futures were down 29 cents, or 0.3%, to $86.52 per barrel, while U.S. West Texas Intermediate crude was down 24 cents, or 0.3%, to $82.95 per barrel.

Despite anticipation that the Federal Reserve is nearing the end of raising interest rates, prices declined on Monday as the U.S. dollar index extended gains following a somewhat larger increase in producer prices in the country in July increased Treasury yields.

The International Energy Agency stated in its monthly report on Friday that supply reductions by Saudi Arabia and Russia, two members of the Organization of the Petroleum Exporting Countries and their Allies, or OPEC+, are anticipated to deplete oil inventories in the remaining months of this year and potentially push prices even higher.

The price differential between first- and second-month Brent maintained stable on Monday after closing at 67 cents on Friday, the largest since March, reflecting tightened supplies.

On Sunday, a Russian warship fired warning shots at a cargo ship in the Black Sea, heightening tensions in a crucial region for the flow of goods between Russia and Ukraine.

According to Baker Hughes’ weekly report, the number of working oil rigs in the United States remained at 525 last week after declining for eight consecutive weeks.

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