Feb 27 (Reuters) – Oil prices fell in volatile trading on Monday as a stronger dollar and recession fears could wipe out gains from Russia’s plans to deepen oil supply cuts.
West Texas Intermediate U.S. crude oil futures (WTI) traded at $76.09 a barrel, down 23 cents, or 0.3%, while Brent crude oil futures were down 30 cents, or 0.36%, at $82.86 a barrel at 0411 GMT.
Both benchmarks closed more than 90 cents higher on Friday.
The dollar hovered near a seven-week high on Monday after a slew of strong US economic data bolstered beliefs that the Federal Reserve will need to hike rates further and longer.
A strong dollar makes commodities priced in the US currency more expensive for holders of other currencies.
“Crude continues to track sentiment in broader financial markets,” said Vandana Hari, founder of oil market analytics provider Vanda Insights.
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Fears of an aggressive Fed came to the fore again on Friday after the personal consumption price index (PCE) surged 0.6% last month after rising 0.2% in December.
“If risk aversion continues to grow, crude oil is likely to come under pressure again,” Hari said.
Adding to the downward pressure, U.S. crude inventories rose last week to their highest level since May 2021, data from the Energy Information Administration (EIA) showed.
“The EIA data continues to raise more questions rather than clarify markets,” analysts from the consultancy Energy Aspects said in a note, citing the strong supply adjustment in the data that contributed to construction.
On the supply side, Russia plans to cut oil exports from its western ports by up to 25% in March from February, surpassing previously announced production cuts of 5% of its production during the month.
Oil prices have fallen by about a sixth in the year since February 24, 2022, when Russian troops first entered Ukraine.
Russia halted oil supplies to Poland through the Druzhba pipeline, the CEO of the Polish refinery PKN Orlen (PKN.WA) said on Saturday, a day after Poland delivered its first Leopard tanks to Ukraine.
Two weeks after the invasion, prices rose to a record high of nearly $128 a barrel on supply concerns, but have since cooled amid fears of a global economic slowdown.
Separately, investors are bracing for China’s manufacturing surveys this week for a clear direction on oil demand. China is holding its annual parliamentary session starting this weekend and will see new economic policy goals and policies.
“We expect the government to reiterate the priority of supporting growth and call for more policy support,” Ning Zhang, senior China economist at UBS Investment Bank, said in a note.
Reporting by Mohi Narayan in New Delhi and Sudarshan Varadhan in Singapore
Our Standards: The Thomson Reuters Principles of Trust.
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