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Oil prices dipped on Monday amid cautious sentiment as a plunge in financial markets last week and dollar strength early this week underscored concerns that growth may be slowing, especially in Asia’s emerging economies.
Front-month Brent crude oil futures (LCOc1) were trading down 46 cents, or 0.6 percent, at $77.16 a barrel at 0745 GMT.
U.S. West Texas Intermediate (WTI) crude futures (CLc1) were at $67.19 a barrel, down 40 cents, or 0.6 percent.
Investors remained wary after hefty losses last week, while a stronger dollar on safe-haven buying puts pressure on the purchasing power of emerging markets.
“The bears seem well in control of the market and there are many reasons to justify their actions,” said Hussein Sayed, chief market strategist at futures brokerage FXTM.
He pointed to “weakening global economic growth, the ongoing U.S.-China trade war, monetary policy tightening, fears of a hard Brexit (and) Italy’s budget woes” as main reasons for the selloffs.
Singapore-based ship tanker brokerage Eastport said financial market turmoil may “weigh on investment and consumer spending, reducing trade flows and ultimately hitting demand”.
Hedge funds slashed their bullish wagers on U.S. crude in the latest week to the lowest level in more than a year, the U.S. Commodity Futures Trading Commission said on Friday.
The speculator group cut its combined futures and options position in New York and London by 42,644 contracts to 216,733 in the week to Oct. 23, the lowest level since September 2017.
There were also signs of a slowdown in global trade, with rates for dry-bulk and container ships – which carry most raw materials and manufactured goods – coming under pressure.
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