Oil prices fell on Monday, extending losses from last week, after the US dollar jumped to a three-week high and the number of US drilling rigs increased, even though nearly a quarter of US production in the Gulf of Mexico remained shut down after two hurricanes.
Brent crude futures fell 61 cents, or 0.8%, to $74.73 a barrel, after falling 33 cents on Friday. US West Texas Intermediate crude futures fell 66 cents, or 0.9%, to $71.31 a barrel, after falling 64 cents on Friday.
“The advance of the US dollar over the past two days has caused some market headwinds,” ING Bank researchers said in a note today.
Oil fell as the dollar approached a three-week high after rallying on Friday on the back of better-than-expected US retail sales data. This reinforced expectations that the US Federal Reserve will start reducing its asset purchases later this year. A rising dollar makes oil priced in it more expensive for holders of other currencies, limiting demand.
The rising number of drilling rigs in the United States also pressured oil prices. Baker Hughes said on Friday that the number of oil and gas rigs rose by 9 to 512 in the week ending September 17, the highest level since April 2020, and its level compared to the same period last year.
The Bureau of Safety and Environmental Enforcement said 23% of US crude production in the Gulf of Mexico, or 422,078 barrels per day, was shut down by Friday.
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