Oil eased to trade near 2-month low on China demand fears, dollar strength

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

LONDON, Nov 21 (Reuters) – Oil prices fell to trade near two-month lows on Monday, after falling around $1 a barrel earlier, as supply fears eased while concerns over fuel demand from China and the strength of the U.S. dollar weighed on prices.

Brent crude futures for January had fallen 65 cents, or 0.7%, to $86.97 a barrel by 1000 GMT.

US 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 on Monday. The more active January contract was down 50 cents, or 0.6%, at $79.61 a barrel.

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

“Apart from the weakened demand outlook due to China’s COVID mitigation, a decline 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 major country economic data point to a recessionary scenario, especially in the UK and the eurozone,” she said, adding that hawkish comments from the US Federal Reserve last week also sparked concerns over the US economy. Outlook.

New COVID case numbers in China remained close to April peaks as the country battles outbreaks across the country and in major cities. Schools in some districts in the capital Beijing switched to online classes on Monday after officials 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 oil futures spread narrowed sharply last week as WTI reversed into contango, reflecting easing supply concerns.

Meanwhile, expectations of further rate hikes elsewhere have boosted the dollar, making dollar-denominated commodities more expensive for investors.

Additions by Florence Tan and Emily Chow; editing by Kenneth Maxwell and Jason Neely

Our standards: Thomson Reuters Trust Principles.

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