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The U.S. dollar, seen as a safe haven, rose as
worries about Chinese property developer Evergrande's solvency
spooked equity markets and as investors braced for the Federal
Reserve to take another step towards tapering this week. [USD/]
"Far East stock markets and the strong dollar are affecting
oil," said Tamas Varga of oil broker PVM. "Nonetheless, unless
all hell breaks loose, the positive sentiment ought to prevail."
Brent crude fell $1.27, or 1.7%, to $74.07 at 0941 GMT, having
dropped as low as $73.75 earlier in the session. U.S. West Texas
Intermediate (WTI) declined $1.33, or 1.9%, to $70.64.
A stronger dollar makes U.S. dollar-priced oil more expensive
for holders of other currencies and generally reflects higher
risk aversion, which tends to weigh on oil prices.
Brent has gained 43% this year, supported by supply cuts by the
Organization of the Petroleum Exporting Countries and allies and
some recovery in demand after last year's pandemic-induced
collapse.
Oil had gained additional support from supply shutdowns in the
U.S. Gulf of Mexico due to the two recent hurricanes, but as of
Friday producing companies had just 23% of crude production
offline, or 422,078 barrels per day.
"U.S. production in the Gulf of Mexico, which had been shut down
as a result of the hurricane, is gradually returning to the
market," said Carsten Fritsch, an analyst at Commerzbank.
A rise in the U.S. rig count, an early indicator of future
output, to its highest since April 2020 also kept a lid on
prices.
(Reporing by Alex Lawler; Additional reporting by Sonali Paul in
Melbourne, and Roslan Khasawneh and Koustav Samanta in
Singapore; Editing by Tom Hogue and Emelia Sithole-Matarise)
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