Oil prices fell more than $2 a barrel on Monday after China‘s stimulus plan disappointed investors looking for increased fuel demand in the world’s second-biggest oil consumer and as the U.S. dollar edged higher.
Brent crude futures fell 1.94% while US WTI Y futures fell more than 2%. It recalls that both benchmarks fell more than 2% on Friday.
Donald Trump’s victory in the US election may continue to weigh on the market, said Phil Flynn, senior analyst at Price Futures Group.
“The election with Trump’s promise to fully liberalize mining took away some of the incentive …,” Flynn said.
A stronger dollar makes commodities denominated in the US currency, such as oil, more expensive for holders of other currencies and tends to weigh on prices
Fewer traders were in the market on Monday, which is the federal Veterans Day holiday, Flynn said, helping prices fall as markets watch for threats to demand.
How the rise of the dollar has affected oil
The U.S. dollar index, a measure of its value against a basket of foreign currencies, edged slightly above highs seen immediately after the Nov. 5 U.S. presidential election, with markets still awaiting clarity on future U.S. policy .
A stronger dollar makes commodities denominated in the US currency, such as oil, more expensive for holders of other currencies and tends to weigh on prices.
In China, consumer prices rose at their slowest pace in four months in October, while producer price deflation deepened, data showed on Saturday, even as Beijing doubled down on stimulus measures to support the economy.
“China’s inflation data was again weak, with the market fearing deflation, particularly as the year-on-year change in the producer price index slipped further into negative territory… Chinese economic momentum remains negative,” said Achilleas Georgolopoulos, analyst market on the XM stock exchange.
The latest support measures will not revive China’s oil demand growth or crude imports, said Tamas Varga, an analyst at oil brokerage PVM.
“Following the US presidential election last week, attention is slowly shifting back to the underlying fundamentals,” Varga said.
Oil prices also fell after concerns over potential supply disruptions from Hurricane Rafael in the US Gulf of Mexico eased.
More than a quarter of US oil in the Gulf of Mexico and 16% of natural gas production remained offline on Sunday, according to the offshore energy regulator.
SOURCE: ot.gr
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