Oil prices extended last week’s losses and traded lower early on Monday, weighed down by lingering concerns about demand amid economic growth worries.
Oil continued the drop from last week, which was the first week in five to see a weekly decline in prices, as concerns about demand resurfaced despite data from China showing better-than-expected economic growth for the first quarter of the year.
Across oil markets, “refinery margins remain under pressure, largely a result of weakness in middle distillates. However, gasoline cracks have also started to see some weakness,” ING strategists Warren Patterson and Ewa Manthey said on Monday.
“The growth-sensitive commodities, such as copper and crude oil prices, fell due to risk-aversion sentiment as the weak US economic data and disappointing tech earnings sparked growth concerns,” Tina Teng, a market analyst at CMC Markets, wrote on Monday.
Rising bond yields and the stabilized U.S. dollar are also weighing down on commodity markets, Teng added.
A rising U.S. dollar makes crude oil more expensive for holders of other currencies.
“Crude oil prices traded lower in Asia overnight on a combination of technical factors, such as ongoing attempts to close the gaps down to $80 in Brent and $75.70 in WTI as well as long-liquidation from funds that bought futures contracts following the April 3 OPEC+ production cut announcement,” analysts at Saxo Bank said in a note today.
“The short-term fundamental outlook also continues to deteriorate with recession worries more than offsetting supply cuts as refinery margins remain under pressure across all the major trading hubs sending a warning sign about demand ahead of the peak consumption season,” they added.
By Tsvetana Paraskova for Oilprice.com
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