Oil drops with stronger dollar and rising U.S. rig count
Although nearly a quarter of US Gulf of Mexico production went offline after two hurricanes, oil prices fell on Monday. Oil extending Friday's losses after the US dollar jumped to a three-week high and the number of rigs in the US rose.
As of Friday, 23% of U.S. Gulf of Mexico crude output, or 422,078 barrels per day, remained shut, the Bureau of Safety and Environmental Enforcement reported.
Brent crude futures fell 48 cents, or 0.6%, to $74.86 a barrel at 0410 GMT after losing 33 cents on Friday.
West Texas Intermediate (WTI) crude futures fell 55 cents, or 0.8%, to $71.42 a barrel after falling 64 cents on Friday.
The rising strength in the US dollar over the past few days has exposed the market to some headwinds. Oil tumbled to the highest level in three weeks as the dollar strengthened after Friday's rally after better-than-expected US retail sales data.
This situation strengthened the expectations that the US Federal Reserve will begin to reduce its asset purchases this year.
WTI crude could consolidate over the next few trading sessions until the dollar's direction becomes clear.
There is a possibility of some downside pressure on oil and the broader commodity complex in November.
A strong dollar reduces demand by making US dollar-priced oil more expensive for holders of other currencies.
A rise in the U.S. rig count also kept a lid on oil prices. The oil and gas rig count rose by nine to 512 in the week to Sept. 17, its highest since April 2020 and double the level from this time last year, Baker Hughes said on Friday.
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