Oil prices edged lower on Monday as the U.S. dollar remained strong ahead of key economic data from the Federal Reserve and U.S. payrolls reports later this week.
Brent crude futures fell 28 cents, or 0.4%, to $76.23 a barrel by 0800 GMT, following a Friday close at its highest since October 14. U.S. West Texas Intermediate (WTI) crude dropped 27 cents, or 0.4%, to $73.69 after reaching its highest since October 11 on Friday.
Prices had climbed over five sessions last week amid optimism over rising demand spurred by colder weather in the Northern Hemisphere and fiscal stimulus measures in China. However, the dollar’s strength has tempered sentiment, noted Priyanka Sachdeva, senior market analyst at Phillip Nova.
A strong dollar, hovering near a two-year high on Monday, raises the cost of dollar-denominated commodities like oil.
Investors are closely monitoring economic developments for clues on the Federal Reserve’s rate strategy and implications for energy demand. Minutes from the Fed’s latest meeting are set for release on Wednesday, while the December payrolls report is expected on Friday.
In a separate development, Saudi Aramco raised its February crude prices for Asian buyers for the first time in three months, signaling improved demand expectations in the region.
Meanwhile, future concerns over Iranian and Russian oil supplies linger amid potential sanctions. The Biden administration plans further sanctions targeting Russia’s oil revenues, including measures against tankers transporting Russian crude.
Goldman Sachs projects that tighter sanctions and policy adjustments could reduce Iran’s output by 300,000 barrels per day to 3.25 million bpd by the second quarter.
The U.S. oil rig count, a measure of future production, declined by one to 482 last week, according to energy services firm Baker Hughes. Despite this, analysts expect a supply surplus this year as rising non-OPEC production, particularly from the U.S., is forecast to offset global demand growth.
