Oil futures fell Monday, with the U.S. benchmark extending its decline below the $80-a-barrel threshold on fears aggressive tightening by the Federal Reserve and other central banks will spark a sharp global economic downturn.
Price action
-
West Texas Intermediate crude for November delivery
CL.1,
-0.91% CLX22,
-0.91%
fell 88 cents, or 1.1%, to $77.86 a barrel on the New York Mercantile Exchange. Front-month WTI fell 7.1% last week to end Friday at its lowest since Jan. 10. -
November Brent crude
BRNX22,
-0.91% ,
the global benchmark, was down 90 cents, or 1.1%, at $85.25 a barrel on ICE Futures Europe. The most actively traded December contract
BRN00,
-0.96% BRNZ22,
-0.96%
fell 87 cents, or 1%, to $84.16 a barrel. Front-month Brent dropped 5.7% last week, logging its lowest close since Jan. 14 on Friday. -
Back on Nymex, October gasoline
RBV22,
-1.35%
fell 1.4%, to $2.354 a gallon, while October heating oil
HOV22,
-1.75%
shed 1.9% to $3.174 a gallon. -
October natural gas
NGV22,
-2.89%
dropped 2.7% to $6.644 per million British thermal units.
Market drivers
The ICE U.S. Dollar Index
DXY,
a measure of the currency against a basket of six major rivals, rose 0.5% to another 20-year high on Monday, finding a haven bid as currency markets remained volatile. The British pound
GBPUSD,
slumped to a record low versus the U.S. dollar, remaining under pressure after the U.K. government on Friday introduced a package of large tax cuts that are expected to exacerbate inflation already running hot.
Efforts by global central banks, particularly the Fed, to rein in persistently high inflation have stoked fears of a potential global recession that would dent demand for crude.
“From a fundamental standpoint, declining demand expectations are trumping supply side concerns linked to the Russia-Ukraine war and over-compliance by OPEC+ producers,” wrote analysts at Sevens Report Research, in a note. “Until the macro outlook stabilizes, oil will remain under pressure.”
