Oil prices fall 2.5pc on strong dollar, weak China data

NEW YORK: Oil prices tumbled more than 2.5 per cent on Monday in volatile trade, as dollar strength and weak domestic demand data in China hammered prices that had received a short-lived boost on concerns about potential reductions in crude supply from Libya.

Global benchmark Brent crude futures LCOc1 settled down $1.37 or 2.63 per cent at $50.73.

US West Texas Intermediate crude futures CLc1 settled down $1.23, or 2.52 per cent at $47.59 a barrel. “It is a strong dollar, concern about China demand, and weak volumes,” said Phil Flynn, an analyst with Price Futures Group in Chicago.

The dollar rose broadly as traders unwound bearish bets against the US currency that have come in the wake of increasing tensions with North Korea and underwhelming inflation data.

The absence of further abrasive rhetoric by US President Donald Trump and North Korean leader Kim Jong Un over the weekend helped bring investors back to the dollar, analysts said. Oil prices fell on news that refinery runs in China dropped in July.

Analysts said the drop was steeper than expected, exacerbating concerns that a glut of refined fuel products could weaken Chinese demand for oil.

Efforts by the Organization of the Petroleum Exporting Countries (Opec) and other oil producers to limit output have helped lift Brent past $50 a barrel. Still, analysts and traders worry that US output could undermine efforts to cut production.

US shale output is expected to rise again in September, according to US data issued late in the session. US shale oil production for September which includes a new regional data input, is forecast to rise by 117,000 barrels per day to 6.15 million bpd, the US Energy Information Administration said

Trade was volatile, with prices falling early on the Chinese demand data, then retracing losses after Libya’s national oil corporation said it was investigating security violations at the country’s largest oil field. A disruption from the 270,000 bpd Sharara field could cut supplies from producer group Opec. The NOC did not specify whether the violations had affected output at the field.