Oil extends losses as strong dollar weighs on commodities markets

  • Geopolitical risks in the Middle East from the Gaza crisis and a ramp-up in Ukrainian drone attacks on Russian refineries are underpinning oil prices.
Oil rig
Geopolitical risks in the Middle East from the Gaza crisis and a ramp-up in Ukrainian drone attacks on Russian refineries are underpinning oil prices. (REUTERS)
Oil rig
Geopolitical risks in the Middle East from the Gaza crisis and a ramp-up in Ukrainian drone attacks on Russian refineries are underpinning oil prices.

Oil prices fell in early Asian trade on Monday for a second straight session, weighed down by a stronger dollar after concerns of higher-for-longer interest rates resurfaced and cooled investors' risk appetite.

Brent crude futures slid 40 cents, or 0.5 per cent, to $84.84 a barrel by 0036 GMT, after settling down 0.6 per cent on Friday. U.S. West Texas Intermediate crude futures were at $80.34 a barrel, down 39 cents, or 0.5 per cent.

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"The U.S. dollar has opened bid this morning and appears to have broken higher following better U.S. PMI data on Friday night and political concerns ahead of the French election," said Tony Sycamore, a Sydney-based markets analyst at IG.

A stronger greenback makes dollar-denominated commodities less attractive for holders of other currencies.

However, both benchmark crude contracts gained about three per cent last week on signs of stronger oil product demand in the U.S., the world's largest consumer, and as OPEC cuts kept supply in check.

U.S. crude inventories fell while gasoline demand rose for the seventh straight week and jet fuel consumption has returned to 2019 levels, ANZ analysts said in a note.

Geopolitical risks in the Middle East from the Gaza crisis and a ramp-up in Ukrainian drone attacks on Russian refineries are also underpinning oil prices.

In Ecuador, state oil company Petroecuador has declared force majeure over deliveries of Napo heavy crude for exports following the shutdown of a key pipeline and oil wells due to heavy rains, sources said on Friday.

In the U.S., operating oil rigs fell three to 485 last week, their lowest since January 2022, Baker Hughes said in its report on Friday.

First Published Date: 24 Jun 2024, 07:24 AM IST
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