Brent crude futures fell 14 cents, or 0.2 percent, to $81.48
a barrel by 9:56 a.m. Saudi time, while US West Texas Intermediate crude
futures declined 22 cents, or 0.3 percent, to $76.27 a barrel as the US dollar
strengthened. A stronger dollar makes oil more expensive for holders of other
currencies.
The dip built on losses last week, when Brent declined about
2 percent and WTI fell more than 3 percent as markets pushed out the start of
US interest rate cuts by two months due to an uptick in inflation.
“The risk-on sentiment seems to be in a retreat after the
Nvidia-led market rally last week as higher-for-longer rate expectations lifted
the US dollar, pressuring commodity prices,” Auckland-based independent analyst
Tina Teng said.
Oil prices have been trading between $70 and $90 a barrel
since November, as rising supply in the US and concerns of weak demand in China
offset supply cuts by OPEC and its allies, known as OPEC+, despite two wars
raging.
“Crude oil prices declined for want of fresh drivers,” ANZ
analysts wrote in a note. “Oil has been caught between bullish factors such as
lower OPEC output and elevated geopolitical risks and bearish concerns about
weak demand in China.”
As the Israel-Hamas conflict continues in the Middle East,
White House national security adviser Jake Sullivan told CNN on Sunday that
negotiators for the US, Egypt, Qatar and Israel had agreed on the basic
contours of a hostage deal during talks in Paris but are still in negotiations.
Israeli Prime Minister Benjamin Netanyahu said it was not
clear yet whether a deal would materialize.
The geopolitical risk premium from Yemeni Houthis’ attacks
on ships in the Red Sea remained modest at only a $2 a barrel boost to Brent,
Goldman Sachs analysts said in a note.
However, the bank has raised its summer peak price to $87 a
barrel, up from $85, as Red Sea disruptions have driven larger-than-expected
draws in stocks held by countries that are members of the Organization for
Economic Co-operation and Development.
Goldman Sachs still expects oil demand to grow by 1.5
million barrels per day in 2024 but has cut China’s forecast while raising that
for the US and India.
Separately, investors are keeing an eye on the impact on
Russian oil supply after the US sanctioned Moscow’s leading tanker group
Sovcomflot on Friday.
Adding to global energy supplies, Qatar will further raise
liquefied natural gas production despite a recent steep drop in global prices.
In the US, the ANZ analysts anticipated oil stockpiles could
start to fall in the coming weeks as refineries return from maintenance, which
could offer some support to prices.
US energy firms this week added the most oil rigs since
November, and the most in a month since October 2022, energy services firm
Baker Hughes said.