Oil prices fell in the US on Monday as they came under pressure due to the rise of the US Dollar. The dollar became strong due to rising US inflation. This happened as concerns over slowing Chinese growth reduced sentiment.
Although they were losses in the crude oil market, they are still limited due to recent production cuts by Russia and Saudi Arabia, as the market gets tighter. The market saw prices of crude oil remaining close to their strongest levels for the year.
According to Investing.com –
“while oil prices had a strong rally over the past two months, they faced some resistance in recent weeks as markets questioned the outlook for oil demand, amid worsening conditions in China and potentially higher U.S. interest rates. Brent oil futures fell 0.1% to $86.61 a barrel, while West Texas Intermediate crude futures fell 0.2% to $83.03 a barrel by 21:58 ET (02:58 GMT).”
The stronger dollar created a big pressure on oil markets, as it faced a value that is a five-week high, as last week saw a rise in inflation levels.
As per Friday’s data, it has been observed that the producer price index inflation of the United States grew more than expected in the month of July. This data came just after the day when experts observed that there had been a rise in Consumer Price Index Inflation in July.
As inflation rise, the United States Federal Reserve gets more chance to increase interest rates to control inflation. This, in turn, creates a chance for the dollar to strengthen itself. As the dollar gets stronger, it reduces the prices of related commodities, which, in turn, hurts oil demand in the international market.