- After rising 2.4% on Friday, Brent crude futures for September fell 0.3% at 0300 GMT.
- U.S. West Texas Intermediate oil futures for August delivery fell 34 cents, to $108.09 a barrel.
- The main bearish reason that has restrained the rise in oil prices is recession fears.
Despite the fact that supply is still limited due to lower OPEC production, upheaval in Libya, and sanctions against Russia, oil prices dipped on Monday, erasing gains from the previous session.
After rising 2.4 percent on Friday, Brent crude futures for September fell 36 cents, or 0.3 percent, to $111.27 a barrel at 0300 GMT.
After rising 2.5 percent on Friday, U.S. West Texas Intermediate (WTI) oil futures for August delivery fell 34 cents, or 0.3 percent, to $108.09 a barrel.
“The main bearish reason that has restrained the rise in oil prices is recession fears. While data indicates that U.S. petroleum refinery capacity has increased, rising rates and a decline in consumer confidence have hurt the forecast for fuel demand, according to CMC Markets analyst Tina Teng.
Additionally, a strong dollar weakens all major commodity markets, including the price of crude.
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Despite a little improvement in inflation expectations, U.S. consumer sentiment hit a record low in June as worries about interest rate hikes increased and the Federal Reserve declared its commitment to containing inflation to be “unconditional.”
Concerns about the oil supply are still present, limiting further price declines.
Energy markets continue to be plagued by particular supply worries, making being short a nerve-wracking experience, according to Commonwealth Bank commodities expert Tobin Gorey.
According to a Reuters survey, the Organization of the Petroleum Exporting Countries (OPECten )’s members produced 100,000 fewer barrels per day (bpd) in June than they had promised to increase production by approximately 275,000 bpd.
Declines in Nigeria and Libya offset increases by Saudi Arabia and other significant producers, and Libya faces further supply disruption due to escalating political unrest, analysts with ANZ Research wrote in a note. This makes the likelihood that OPEC will meet its recently increased production quotas even less likely.
The National Oil Corp reported last week that Libya’s exports have decreased to between 365,000 and 409,000 bpd, or around 865,000 bpd below normal levels.
A planned strike by Norwegian oil and gas employees this week could reduce the nation’s output of oil and condensate by 130,000 bpd, significantly reducing supply.
As refiners prepare for another significant increase that could approach the record established in May, traders will be keeping an eye out for official prices for August from leading oil producer Saudi Arabia.
According to nine refining sources assessed by Reuters, the official selling price of Saudi Arabia’s flagship Arab Light crude might increase by roughly $2.40 per barrel from the previous month.
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