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Oil Slides 2% on Worries about Weak Demand

Oil prices fell on Tuesday on concerns about weak demand in the United States and Asia, although ongoing production outages on the U.S. Gulf Coast helped to limit losses.

Industry analysts said a strengthening U.S. dollar also weighed on crude prices. A strong dollar makes oil more expensive for holders of other currencies.

U.S. West Texas Intermediate crude was down $1.45 or 2.1% from Friday’s close at $67.84 a barrel at 1648 GMT. There was no settlement price for Monday due to the Labor Day holiday in the United States.

Brent crude futures fell 93 cents, or 1.3%, to $71.30 a barrel by, after falling 39 cents on Monday.

The U.S. economy created the fewest jobs in seven months in August as hiring in the leisure and hospitality sector stalled amid a resurgence in COVID-19 infections.

Analysts said the oil market was still assessing the data from Friday as well as Saudi Aramco’s move on Sunday to cut October official selling prices (OSPs) for all its crude grades sold to Asia by at least $1 a barrel.

The deep price cuts, a sign that consumption in the world’s top-importing region remains tepid, come as lockdowns across Asia to combat the Delta variant of the coronavirus have clouded the economic outlook.

“There’s some concern about demand going forward because of a weak jobs report in the U.S. and COVID fears. The market is catching a bad mood,” said Phil Flynn, analyst at Price Futures Group in Chicago.

Oil prices found some support from strong Chinese economic indicators and continued outages of U.S. supply from Hurricane Ida.

China’s crude oil imports rose 8% in August from a month earlier, customs data showed, while China’s economy got a boost as exports unexpectedly grew at a faster pace in August.

More than 80% of oil production in the Gulf of Mexico remained shut after Ida, a U.S. regulator said on Monday, more than a week after the storm made landfall and hit critical infrastructure in the region.

Additional reporting by Ahmad Ghaddar in London and Yuka Obayashi in Tokyo; Editing by Jane Merriman and Edmund Blair

Source: Reuters

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