According to Bloomberg, oil prices experienced another drop as risky assets made an unexpected entrance into the week while the US Dollar gained ahead of a Federal Reserve meeting hopeful for a stimulus scaled back.
Traders of futures also experienced a few stepbacks as futures in New York fell below their initial $71 a barrel amid a greater dip in stock markets. The dollar took gains for a third day, making products priced in the currency less attractive to traders. Policymakers are likely to commence groundwork to reduce the purchase of monthly assets when the Fed holds its meetings starting from Tuesday. On the other side, market players are also considering spillover risks from the Chinese Evergrande Group’s woes.
Analyst at Commerzbank AG, Carsten Fritsch believes the gains on the dollar might be the major cause of the price drop. “Oil prices are down as the new week of trading gets underway. Prices are facing a “headwind today from the U.S. dollar in particular, which is showing signs of strength ahead of the Fed’s meeting.”
With this looking like a bearish way to begin the week, traders are also observant of Europe’s ongoing energy talks on the continent’s decisions to switch from gas to oil. Expectations are also high that the demand for diesel will grow in places like Asia during winter, while more oil is expected to be seen in America’s power generation needs. Recently, the prices for fuels used in heating like liquefied petroleum gas have also tripled..
|West Texas Intermediate for October delivery dropped 1.6% to $70.80 a barrel at 9:36 a.m. London timeBrent for November settlement slid 1.4% to $74.32|
Iraq hopes oil prices will reach their $70 a barrel expectations by 2022’s first quarter, with the market kept regulated by supply increases from the OPEC+ alliance and demand continuing to jolt to life from COVID19.
Credit: Rigzone, Bloomberg.