By Florence Tan
SINGAPORE (Reuters) – Oil prices fell for a second straight session on Monday, weighed down by a firmer dollar, as expectations of interest rate cuts were tempered following strong U.S. jobs data on Friday. fair.
Brent crude futures and US West Texas Intermediate crude futures fell 4 cents to $79.58 and $75.49 a barrel respectively at 0036 GMT.
On Friday, data showed the U.S. added more jobs than expected last month, prompting investors to scale back expectations of rate cuts and triggering a recovery in the dollar. [FRX/]
A stronger dollar makes dollar-denominated raw materials, such as oil, more expensive for holders of other currencies.
The euro also came under pressure, reflecting uncertainty in the euro zone after French President Emmanuel Macron called early legislative elections for the end of June, after being defeated in the European Union vote by the far-right party of Marine LePen.
“In relation to Macron and the election, this creates another layer of uncertainty, coming on the heels of the positive surprise in US non-farm payrolls, which saw yields soar,” said Sydney-based IG analyst Tony Sycamore.
Markets are focused on the US Federal Reserve and Bank of Japan meetings this week, with the risks of more aggressive outcomes, Sycamore said.
“This will likely create more angst among some of the OPEC+ member states about when they will be able to return their cuts to the market, given the negative reception this proposal received last week following the OPEC+ meeting,” he added.
Brent and WTI posted their third consecutive weekly loss last week due to concerns that a plan to ease production cuts by the Organization of the Petroleum Exporting Countries and its allies, a group known as OPEC+, from October , will contribute to increasing global supply.
The announcement coincided with a rise in total onshore OECD commercial stocks of oil and products to around 48 million barrels in May, compared with the average increase of 30 million barrels during 2015-2019, energy consultancy FGE said.
Analysts and traders expect summer holiday demand to deplete inventories and support prices.
“We continue to expect the market to firm up and oil prices to average levels of $80/bbl as we move into 3Q 2024, but a convincing tightening signal from preliminary inventory data will likely be needed,” said FGE.
In the US, Washington intensified the purchase of crude oil to replenish the Strategic Petroleum Reserve after falling prices.
Last week, U.S. energy companies reduced the number of oil and natural gas platforms in operation to the lowest level since January 2022, energy services firm Baker Hughes said on Friday.
In the Middle East, Iraqi Oil Minister Hayan Abdel-Ghani said progress had been made in talks with officials in the Kurdistan region and representatives of international companies operating there toward an agreement to resume oil exports through the Iraq- Turkey which has already moved around 0.5% of the global oil supply.
(Reporting by Florence Tan; Editing by Sonali Paul)
