Commodities

Oil down on stronger greenback, rising US rig count

Reuters Singapore | Updated on September 20, 2021

Brent crude futures fell 48 cents to $74.86 a barrel after losing 33 cents on Friday. US West Texas Intermediate crude futures fell 55 cents to $71.42 a barrel, after declining by 64 cents on Friday.

Oil prices fell on Monday, extending losses from Friday, after the US dollar jumped to a three-week high and US rig count rose, although nearly a quarter of US’ Gulf of Mexico output remained offline in the wake of two hurricanes.

Brent crude futures fell 48 cents, or 0.6 per cent, to $74.86 a barrel at 0410 GMT after losing 33 cents on Friday.

US West Texas Intermediate (WTI) crude futures fell 55 cents, or 0.8 per cent, 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.

Greenback rally

Oil fell with the greenback near a three-week high following a rally on Friday on better-than-expected US retail sales data. This bolstered expectations that the US 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 that such an announcement was more likely in November.

Also see: Oil dips as US storm-hit supply makes slow return

A stronger greenback makes US dollar-priced oil more expensive for holders of other currencies, curtailing demand.

A rise in the US rig count also kept a lid on oil prices. The oil and gas rig count rose by nine to 512 in the week to September 17, its highest since April 2020 and double the level from this time last year, Baker Hughes said on Friday.

As of Friday, 23 per cent of US’ Gulf of Mexico crude output, or 422,078 barrels per day, remained shut, the Bureau of Safety and Environmental Enforcement reported.

Published on September 20, 2021

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