Oil prices slipped in Monday Asian morning trade as concerns about possible further U.S. interest rate hikes continue to rattle investors, though a recovery in Chinese demand and a weaker dollar provided some support. Brent crude futures fell 15 cents, or -0.18%, to $82.63 per barrel by 0132 GMT. West Texas Intermediate crude futures (WTI) dipped by 9 cents, or -0.12%, to $76.59 a barrel.
Market sentiment was fragile as worries about further monetary tightening by the Fed have been exacerbated by high crude oil inventories in the U.S., analysts from ANZ Bank observed in a note on Monday morning. A weaker greenback, which makes oil cheaper for holders of other currencies, helped lend support to oil prices.
The failure of Silicon Valley Bank and New York-based Signature Bank and concerns about possible contagion led to a selloff in U.S. assets at the end of last week, has put downward pressure on the dollar. The dollar index was down 0.2% in Asian morning trade on Monday.
Comments on Sunday from Saudi Aramco CEO Amin Nasser on crude demand from China also provided some support.”If you considered China opening up and a pick up in jet fuels and very limited spare capacity, we are talking 2 million barrels, so as I said we are cautiously optimistic in the short to midterm and the market will remain tightly balanced,” he said.
The comments come in the wake of the announcement that Riyadh and Tehran had agreed to restore diplomatic relations in a China-brokered deal, potentially paving the way to the revival of a nuclear deal that would allow exports of currently-sanctioned Iranian crude.
Oil’s weak start to the week represents a slowing of positive momentum from Friday, when U.S. employment data surprised to the upside. Data for February beat expectations with nonfarm payrolls rising by 311,000, compared with expectations of 205,000 jobs added, according to a Reuters survey.
From a medium to long-term supply perspective, energy services firm Baker Hughes Co said on Friday U.S. energy firms this week cut the number of oil and natural gas rigs operating for a fourth week in a row for the first time since July 2020.