By Arathy Somasekhar
HOUSTON – Oil prices edged lower after rising more than $1 a barrel on Monday as a stronger dollar and fears that slower growth in major economies could curb demand outweighed supply concerns.
Brent futures for April delivery fell 55 cents, or 0.7%, to $79.39 a barrel by 10:42 a.m. ET (1542 GMT), while West Texas Intermediate crude (WTI) for March declined 79 cents, or 1.1%, to $72.60 per barrel.
Friday’s blowout U.S. employment number raised expectations that the Federal Reserve’s rate hikes will not end with a hard economic landing, and that the U.S. central bank may have more than one more rate increase left, which could curb economic growth and lower fuel demand.
The dollar also rose to a three-week high against the euro on Monday. A stronger dollar typically reduces demand for greenback-denominated oil from buyers paying with other currencies.
“You’ve got a strong dollar, you’re in a generally risk-off environment,” said Robert Yawger, executive director of energy futures at Mizuho.
WTI and Brent had slid 3% last Friday after the strong U.S. jobs data.
Still, prices were buoyed by prospects for China’s recovery after the relaxation of COVID-19 restrictions remains a driver for oil prices.
The International Energy Agency (IEA) expects half of this year’s global oil demand growth to come from China, the agency’s chief said on Sunday, adding that jet fuel demand was surging.
Supply concerns continued to affect markets, however, as operations at Turkey’s oil terminal in Ceyhan halted after a major earthquake struck nearby on Monday.
Also, price caps on Russian products took effect on Sunday, with Group of Seven nations, the European Union and Australia agreeing on price limits of $100 a barrel on diesel and other products that trade at a premium to crude and $45 a barrel for products that trade at a discount, such as fuel oil.