The recent rise in oil prices comes in the wake of both Saudi Arabia and Russia reducing their production. According to Opec+’s estimates, the cuts have resulted in a deficit of more than two million barrels per day this quarter.
On Monday morning, however, oil prices fell, and a barrel of Brent oil traded for $85.94, down around 1 percent since midnight. The US shale oil, WTI, falls 1.1 percent to 82.29 dollars.
Prices fell as the U.S. dollar strengthened further after a somewhat larger increase in U.S. producer prices in July, which pushed up Treasury yields despite expectations that the U.S. Federal Reserve is done raising interest rates.
A stronger dollar affects demand for oil by making the commodity more expensive for buyers holding other currencies.
Overbought
– Crude oil has been in overbought territory for some time now, and has resisted expectations of a correction. It has been one-sidedly focused on US economic optimism, to the exclusion of the increasingly strong headwinds blowing in the eurozone and China, said Vandana Hari, the founder of oil market analysis provider Vanda Insights, according to Bloomberg.
China will again come into focus this week when the country on Tuesday comes up with figures for industrial production, including for the refining industry. At the same time, statistics for retail sales and unemployment are also released.
On Sunday, a Russian warship fired warning shots at a cargo ship in the Black Sea, raising tensions in an important area for exporting raw materials from Ukraine and Russia. The increasing risk to the flow of Russian crude oil through the Black Sea due to the war in Ukraine has also helped the recovery this summer.
2023-08-14 05:59:26
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