Oil slumps on concerns about an economic slowdown and the strong dollar
Oil prices fell on Monday. Oil ended three-day gains as investors feared aggressive US rate hikes strengthened the dollar, weakening the global economy and reducing fuel demand.
Brent crude futures for the October settlement fell $1.58, or 1.6%, to $95.14 as of 0640 GMT.
West Texas Intermediate (WTI) crude futures ended Monday for September delivery, down $1.70, or 1.9%, to $89.07 a barrel. The more active October contract was down $1.52, or 1.7%, at $88.92.
Both Brent and WTI climbed for the third consecutive day on Friday, but fell about 1.5% along the week on fears of a stronger dollar and demand.
With the hawkish statements of the Fed before Jackson Hole, the dollar rose to a high of 5 weeks. Behind the decline in oil, markets are growing fears of a global economic slowdown. A higher US dollar also led to new sales.
The dollar index rose to a five-week high on Monday. A stronger dollar makes oil more expensive for buyers of other currencies.
The Fed appears to have more room for rate hikes than the central banks of other major economies, which are more fragile.
Investors will closely follow Fed Chairman Jerome Powell's remarks on Friday at the annual global central banking conference in Jackson Hole, Wyoming.
Prices also fell on concerns about slowing fuel demand in China, the world's largest oil importer, caused by a heatwave in the southwest.
It is also worrying that China's power restriction in some regions may affect economic activity. China's southwestern province of Sichuan said it would extend restrictions on industrial energy consumers until August 25 as it tries to cope with declining hydropower production and rising domestic electricity demand after a long heatwave.
China lowers credit criteria to revive the faltering economy. In a sign of general concern about the Chinese economy, Beijing lowered its benchmark loan rate and mortgage reference by a larger margin on Monday to revive the economy, which has been hampered by the real estate crisis and the resurgence of COVID cases.
Meanwhile, the White House said on Sunday that leaders of the United States, Britain, France, and Germany were discussing efforts to revive the 2015 Iran nuclear deal, but no further details were given.
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