Oil slides on China coronavirus curbs, strengthening U.S. dollar

Chevron oil exploration drilling site near Midland, Texas, U.S. August 22, 2019. (Reuters)

SULAIMANI (ESTA) — Oil prices fell by nearly 2% on Monday, extending last week’s steep losses on the back of a rising U.S. dollar and concerns that new pandemic curbs in Asia may set back the global recovery in fuel demand.

Brent crude futures slid by $1.64 to $69.06 a barrel by 0625 GMT, after having slumped 6% last week, their biggest weekly loss in four months.

U.S. West Texas Intermediate (WTI) crude futures fell $1.69 to $66.59 per barrel, after having slumped nearly 7% last week in their steepest weekly decline in nine months.

“Concerns about potential global oil demand erosion have resurfaced with the acceleration of the Delta variant infection rate,” Reuters cited RBC analyst Gordon Ramsay as saying.

ANZ analysts pointed to new restrictions in China, the world’s second largest oil consumer, as a major factor clouding the outlook for demand growth.

The curbs include flight cancelation, warnings by 46 cities against travel, and limits on public transport and taxi services in 144 of the worst hit areas.

A rally in U.S. dollar to a four-month high against the euro also weighed on oil prices, after Friday’s stronger-than-expected U.S. jobs report spurred bets that the Federal Reserve may move more quickly to tighten U.S. monetary policy.

A stronger U.S. dollar makes oil more expensive for holders of other currencies.

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