LONDON: Oil prices eased on Monday, pressured by a strong dollar, but remained at their highest since mid-October as colder weather spurred buying while further support came from expectations of tighter sanctions on Iranian and Russian oil exports.
Brent crude futures lost 33 cents, or 0.4%, to $76.18 a barrel by 0950 GMT, their highest since Oct. 14.
US West Texas Intermediate crude was down 35 cents, or 0.5%, at $73.61, also the highest level since Oct. 14.
Oil had previously chalked up five sessions of gains, buoyed by hopes of rising demand after colder weather in the Northern Hemisphere and more fiscal stimulus to revitalise China’s faltering economy.
Brent crude was supported by colder than normal weather in northwest Europe and the United States, a rally in natural gas prices and higher refining profit margins, said SEB analyst Bjarne Schieldrop.
However, the strength of the dollar is also on investors’ radar, Phillip Nova senior market analyst Priyanka Sachdeva wrote in a report on Monday.
The dollar held close to a two-year peak on Monday, making it more expensive to buy dollar-priced commodities such as oil.
Investors are also awaiting economic news for more clues on energy consumption and the US Federal Reserve’s interest rate outlook.
Minutes of the Fed’s last meeting are due on Wednesday and the December payrolls report is scheduled for Friday.
Meanwhile, Saudi Aramco, the world’s top oil exporter, has raised crude prices in February for buyers in Asia, the first increase in three months.
Oil heads for weekly gains on colder weather, Chinese policy support
A rise in these prices usually indicates firmer demand expectations. On the supply front, stronger Western sanctions on Iranian and Russian oil shipments are a distinct possibility.
The Biden administration plans to impose more sanctions on Russia over its war on Ukraine, taking aim at its oil revenues with action against tankers carrying Russian crude, two sources with knowledge of the matter said on Sunday.
Goldman Sachs expects Iranian oil production and exports to fall by the second quarter as a result of expected policy changes and tighter sanctions from the administration of incoming US President Donald Trump.
Output at the OPEC producer could drop by 300,000 barrels per day (bpd) to 3.25 million bpd by the second quarter, the bank said.
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