Oil prices fall for a second day on fears of recession

A model of barrels of oil in front of the rising stock chart in this illustration, July 24, 2022. REUTERS/Dado Rovich/Illustration

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LONDON (Reuters) – Oil prices fell for a second day on Monday, amid fears that fuel demand will slump from a possible global recession caused by rising interest rates, with more price pressures brought on by a stronger dollar.

Brent crude futures for November settlement were down $1, or 1.2%, at $85.15 a barrel at 0943 GMT. The contract fell to $84.51, the lowest level since January 14.

US West Texas Intermediate crude for November delivery fell 87 cents, or 1.1%, to $77.87. West Texas Intermediate crude fell to $77.21, the lowest level since Jan. 6.

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Both contracts were down about 5% on Friday.

The dollar index, which measures the greenback against a basket of major currencies, rose to a 20-year high on Monday.

A strong dollar tends to reduce the demand for dollar-denominated oil.

Meanwhile, interest rate increases imposed by central banks in many oil-consuming countries to combat soaring inflation have raised fears of an economic slowdown and accompanying stagnation in oil demand.

“The backdrop of global monetary tightening by major central banks to quell high inflation, and a surge in the dollar towards its highest levels in more than two decades, has raised concerns about an economic slowdown and acts as a major headwind of crude oil prices,” said Suganda Sachdeva of Religer brokerage. “.

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Turmoil in the oil market from the Russia-Ukrainian war, with EU sanctions banning the launch of Russian crude in December, has led to some support for prices.

Attention is turning to what the Organization of the Petroleum Exporting Countries (OPEC) and its allies led by Russia, known together as OPEC+, will do when they meet on Oct. 5, having agreed at their previous meeting to modestly cut production.

However, OPEC+ is producing well below its target production, which means the additional cut may not have a significant impact on supply.

Data last week showed that OPEC+ missed its target by 3.58 million barrels per day in August, a larger deficit than in July. Read more

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(Reporting by Noah Browning) Additional reporting by Mohi Narayan in New Delhi and Sonali Paul in Melbourne Editing by David Goodman

Our criteria: Thomson Reuters Trust Principles.

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