Oil prices extended declines on Monday amid signs of weak fuel demand and as comments from U.S. Federal Reserve officials dampened hopes of interest rate cuts, which could slow growth and crimp fuel demand in the world’s biggest economy.
Brent crude futures slid 25 cents, or 0.3%, to $82.54 a barrel by 0505 GMT, while U.S. West Texas Intermediate crude futures were at $78.07 a barrel, down 19 cents, or 0.2%. “Oil markets shrugged off the impact of the Middle East conflicts and shifted attention to the world economic outlook again,” Auckland-based independent analyst Tina Teng said.
China’s producer price index (PPI) contracted in April, suggesting that business demand remained sluggish, she said, adding that recent U.S. economic data signalled a slowdown as well. Both benchmarks settled about $1 lower on Friday as Fed officials debated whether U.S. interest rates are high enough to bring inflation back to 2%, offsetting gains earlier last week from the Israel-Gaza conflict. Analysts expect the U.S. central bank to keep its policy rate at the current level for longer, supporting the dollar. A stronger greenback makes dollar-denominated oil more expensive for investors holding other currencies. Oil prices also fell amid signs of weak demand, ANZ analysts said in a note.
