Oil prices took a breather on Monday as concerns about China’s economic recovery and a stronger dollar pushed back against the seven-week streak of gains driven by OPEC+ supply cuts.
Brent crude slipped by 73 cents to $86.08 a barrel, while U.S. West Texas Intermediate crude dropped to $82.48 a barrel, down by 71 cents.
This dip came as the U.S. dollar gained ground due to a slightly bigger rise in U.S. producer prices, even though the Federal Reserve is expected to slow down interest rate hikes. The stronger dollar makes oil more expensive for those using other currencies, impacting demand.
Vandana Hari, who runs an oil market analysis firm called Vanda Insights, noted that the overexcitement in the oil market has been focused on U.S. economic positivity, ignoring the growing challenges from Europe and China.
Despite this, experts believe that oil prices might stay within a certain range this week. The sluggish recovery in China’s economy and the stronger U.S. dollar could bring prices down a bit. But OPEC+, a group of oil-producing nations, is determined to keep supply in check to stabilise the markets.
Saudi Arabia and Russia, two key players in OPEC+, are cutting their oil production, which is expected to reduce the amount of oil available in the market, possibly leading to higher prices. This was mentioned in a report by the International Energy Agency.
While oil prices are being influenced by these factors, the price difference between different types of oil remained steady on Monday, reflecting the tighter supply.