Oil prices fell on Monday, extending losses from Friday after the U.S. dollar jumped to a three-week high and the U.S. rig count rose, although nearly a quarter of U.S. Gulf of Mexico output remained offline in the wake of two hurricanes. Brent crude futures fell 48 cents, or 0.6%, to $74.86 a barrel at 0410 GMT after losing 33 cents on Friday.
U.S. West Texas Intermediate (WTI) crude futures fell 55 cents, or 0.8%, to $71.42 a barrel, after declining by 64 cents on Friday. “Strength in the USD over the last couple of days has provided some headwinds to the market,” researchers at ING Bank said in a note on Monday.
Oil fell with the greenback near a three-week high following a rally on Friday on better-than-expected U.S. retail sales data. That bolstered expectations the U.S. Federal Reserve will begin reducing asset purchases later this year. “WTI crude may consolidate over the next few trading sessions until the trajectory of the dollar is a little clearer,” OANDA analyst Edward Moya said in a note.
ING said that a tapering announcement this week would “likely put some downward pressure on oil and the broader commodities complex,” although it added such an announcement was more likely in November.
