HOUSTON: Oil prices fell more than $1 a barrel on Monday following a protracted rally and as markets worried about lower demand as the summer driving season in the United States nears its end.
Both Brent crude and US West Texas Intermediate crude recovered from morning lows and were last trading at $85.70, down $1.05, and $81.79, down $1.02, respectively.
Both benchmarks gained for their sixth consecutive week on Friday.
“The summer driving season is winding down in the United States,” said Robert Yawger, director of energy futures at Mizuho Securities USA. “If you don’t need as much gasoline, you don’t need as much oil.”
Meanwhile, Polish pipeline operator PERN said it expects to resume flows on a pipeline that transports oil to Europe on Tuesday, easing worries of supply constrains.
PERN had halted pumping through a section of the Druzhba pipeline after detecting a leak in central Poland on Saturday.
The world’s top exporter Saudi Arabia last week extended its voluntary production cut of 1 million barrels per day (bpd) to the end of September, and said more could follow.
In line with production cuts, Saudi Aramco on Saturday raised the official selling prices for most grades it sells to Asia for a third month in September.
Russia added to the supply tightness with an announcement it will cut oil exports by 300,000 bpd in September.
Chinese economic data this week will be in focus as the market seeks to gauge Beijing’s appetite for more stimulus measures to support the world’s second-largest economy.
Investors will also monitor the US consumer price reading on Thursday that could offer clues on the Federal Reserve’s monetary policy path. On Monday, US Federal Reserve Governor Michelle Bowman said additional interest rate hikes will likely be needed to lower inflation to meet the Fed’s 2% target.
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