Oil prices dropped on Monday, extending a recent losing streak on concerns that an expected rise in U.S. interest rates would weaken fuel demand. Brent crude futures for September settlement had fallen 67 cents, or 0.7%, to $102.53 a barrel by 0421 GMT, down for a fourth day.
U.S. West Texas Intermediate (WTI) crude futures for September delivery slid 77 cents, or 0.8%, to $93.93 a barrel, also down for a fourth day. Both gave up early gains. “Oil prices have been under pressure due to growing worries that aggressive rate rises by the U.S. Federal Reserve will slow the global economy and reduce fuel demand,” said Tetsu Emori, chief executive of Emori Fund Management Inc.
“Slack recovery in the Chinese economy is also weighing on market sentiment,” he said. Oil futures have been volatile in recent weeks as traders have tried to reconcile the possibilities of further interest rate hikes, which could limit economic activity and thus cut fuel demand growth, against tight supply from disruptions in trading of Russian barrels because of Western sanctions amid the Ukraine conflict.
Officials at the Fed have indicated that the central bank would likely raise rates by 75 basis points at its July 26-27 meeting. [REUTERS]
