Oil fell on Monday, reversing earlier gains but continuing a recent losing streak, on concerns that an expected increase in interest rates in the U.S., the world’s biggest oil user, may limit fuel demand growth.
Brent crude futures for September settlement dropped 48 cents, or 0.5%, to $102.72 a barrel at 0205 GMT, down for a fourth day.
U.S. West Texas Intermediate (WTI) crude futures for September delivery fell 65 cents, or 0.7%, to $94.05 a barrel, also down for a fourth day.
“The market tone is likely to remain bearish amid worries that interest rate hikes would slash global fuel demand and that the resumption of some Libyan crude oil output would ease tightness in global supply,” said Kazuhiko Saito, chief analyst at Fujitomi Securities Co Ltd.
Oil futures have been volatile in recent weeks as traders try to reconcile the possibilities of further interest rate hikes that could limit economic activity, and thus cut fuel demand growth, against tight supply from the disruptions in the trading of Russian barrels because of the Western sanctions amid the Ukraine conflict.
Officials at the U.S. Federal Reserve have indicated that the central bank would likely raise rates by 75 basis points at its July 26-27 meeting.
On the supply side, Libya’s National Oil Corporation (NOC) aims to bring back production to 1.2 million barrels per day (bpd) in two weeks, NOC said in a statement early on Saturday.
The European Union said last week that it would allow Russian state-owned companies to ship oil to third countries under an adjustment of sanctions agreed by member states last week aimed at limiting the risks to global energy security.
However, Russian Central Bank Governor Elvira Nabiullina said on Friday that Russia will not supply oil to countries that decide to impose a price cap on its oil.