Oil prices fell on Monday, ending three days of gains, on fears that aggressive interest rate hikes in the United States could lead to a global economic slowdown and hit fuel demand.
At the open, October Brent crude futures were down $3.99, or 4.1%, at $92.73 a barrel. US West Texas Intermediate (WTI) crude for September delivery, due Monday, fell $3.77, or 4.1%, to $87 a barrel. The most active October contract was down $3.73, or 4.1%, at $86.71.
By midday, oil prices had trimmed losses as WTI traded at $89.47 per barrel down 1.13%, while Brent was priced at $95.61 per barrel, down 1.15%. .
“Hectic trading continues. Many factors remain influencing the oil price at the moment, from a tight market to a declining growth outlook to a potential Iran nuclear deal,” said Craig Erlam, senior market analyst at Oanda.
Meanwhile, prices were pressured by concerns about slowing fuel demand in China, the world’s largest oil importer, in part due to power shortages in the country’s southwest.
Beijing cut its benchmark interest rate on Monday as part of measures to revive an economy weighed down by the housing crisis and a resurgence in COVID-19 cases.
The renewed strength of the dollar also affects the price of oil. The dollar index rose to a five-week high on Monday. A stronger US currency is generally bearish for the market, because much of the world’s oil trade is in dollars.
Investors will pay close attention to Fed Chairman Jerome Powell’s comments when he addresses an annual global central banking conference in Jackson Hole, Wyoming, on Friday.
Separately, the leaders of the United States, Britain, France and Germany discussed efforts to revive the 2015 Iran nuclear deal, the White House said on Sunday, which could allow Iranian oil to return to world markets.
What about the other commodities?
Soybean futures on the Chicago Board of Trade rose 1.4% on Monday, supported by hopes of a pick-up in the pace of exports as farmers in the world’s top consumer China battle hot, dry weather it is expected to reduce the size of its harvest.
“It seems like exporters are rushing to secure grain,” said Greg Grow, director of agribusiness at Archer Financial Services. “Right now, the market needs soybeans for close demand.”
Wheat futures also rallied, with the more active soft red winter wheat contract rising on short-coverings after falling to a 6-1/2-month low last week.
Corn futures, meanwhile, gained on advances in wheat and soybeans, but strength was limited as traders awaited weekly crop condition data from the US Department of Agriculture, as well as early updates from surveyed fields in Ohio, South Dakota and Nebraska on the annual Pro Farmer Crop Tour.
Soybean futures for November were up 23.75 cents at $14.2775 a bushel and soft red winter wheat through December added 14.25 cents at $7.8525 a bushel.
December corn was up 3.75 cents at $6.27 a bushel. After some beneficial showers in recent days, traders are monitoring forecasts to see if a dry start to this week is followed by rain in dry parts of the western Midwest US.
The USDA said on Monday that weekly soybean export inspections totaled 686,583 tonnes in the week ending Aug. 18, in line with market forecasts.
Corn export inspections were 740,508 tons and wheat export inspections 594,273 tons. Both were in line with a variety of analyst estimates.
With information from Reuters.
