Oil prices trade near 2-month lows on Chinese demand fears and dollar strength

  • Brent and WTI contracts fell around $1 a barrel earlier
  • Beijing districts close schools as China’s COVID cases rise
  • Rising dollar weighs on prices

LONDON, Nov 21 (Reuters) – Oil prices fell to near their lowest level in two months on Monday, after falling around $1 a barrel, as supply fears faded as Concerns about Chinese fuel demand and the strength of the US dollar weighed on prices.

Brent futures for January had slipped 65 cents, or 0.7%, to $86.97 a barrel at 1000 GMT.

U.S. West Texas Intermediate (WTI) crude futures for December were at $79.71 a barrel, down 37 cents or 0.5%, before the contract expired later Monday. The more active January contract was down 50 cents or 0.6% at $79.61 a barrel.

Both indexes closed Friday at their lowest since September. 27, extending losses for a second week, with Brent down 9% and WTI down 10%.

“Apart from the weakening demand outlook due to COVID restrictions in China, a rebound in the US dollar today is also a bearish factor for oil prices,” said CMC Markets analyst Tina Teng. .

“Risk sentiment is becoming fragile as all recent economic data from major countries point to a recessionary scenario, particularly in the UK and the euro zone,” she said, adding that hawkish comments from the US Federal Reserve last week also raised concerns about the US economy. prospects.

The number of new COVID cases in China remained near April peaks as the country battles outbreaks nationwide and in major cities. Schools in some districts of the capital Beijing switched to online classes on Monday after authorities asked residents to stay at home, while the southern city of Guangzhou ordered a five-day lockdown for its most populous district.

The first-month Brent futures spread narrowed sharply last week as WTI moved into contango, reflecting diminishing supply concerns.

Meanwhile, expectations of further interest rate hikes elsewhere drove the greenback higher, making dollar-denominated commodities more expensive for investors.

Supplementary by Florence Tan and Emily Chow; edited by Kenneth Maxwell and Jason Neely

Our standards: The Thomson Reuters Trust Principles.

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