West Texas Intermediate (WTI) is down well over 2% in Monday afternoon trading, with Brent crude down nearly 2% as well, after a week of soaring prices that had bulls certain oil was heading to $100.
On Monday at 3:08 p.m. ET, WTI was trading at $88.73, shedding 2.27% and down $2.06 on the day. Brent crude was trading at $90.56, giving up 1.78%, or $1.64 on the day.
A strong U.S. dollar, profit-taking, inflationary concerns that could dent demand and forecasts that suggest increasing supply all weighed on oil prices today. Profit-taking was expected after oil hit 10-month highs in Q3, gaining almost 30%.
“The global outlook is quickly taking a turn for the worse and that is both driving the king dollar trade again and weighing on the crude demand outlook,” Reuters cited Edward Moya, senior market analyst at data and analytics firm OANDA, as saying.
The U.S. dollar climbed on Monday when the federal government avoided a shutdown and as it becomes increasingly likely that the Federal Reserve will maintain higher interest rates further into the future. That dollar’s resurgence has been building for four weeks now, assisted by positive economic data, particularly in terms of September manufacturing recovery.
In terms of a government shutdown, on Saturday, U.S. Congress succeeded in passing a stopgap funding bill, temporarily avoiding disaster.
Also weighting on oil prices today was the World Bank forecast for slower Chinese growth, which could crimp demand for oil. The World Bank on Monday forecast China’s growth at 5.1% for 2023, up from 3% in 2022 but still representing a slowing growth pace since April.
On October 4, OPEC+ will host a ministerial panel, with all eyes on whether Saudi Arabia and Russia will maintain their voluntarily 1.3 million bpd output cut.
By Michael Kern for Oilprice.com
Read More: Oil Dips On Soaring U.S. Dollar, Profit-Taking And Demand Worries