The price of oil has fallen by about 0.3 percent, extending yesterday's decline. Prices are under pressure from a strengthening US dollar, fears about oil demand, and investors' doubts that the US and Iran will be able to conclude a nuclear deal. Since the beginning of this week, oil prices have fallen by about 1%.
The US Dollar Currency Index (DXY), which tracks the dynamics of the dollar against six currencies (euro, swiss franc, yen, canadian dollar, pound sterling and swedish krona) rose by 0.11% to 103.43.
Meanwhile, yesterday the US and Iran denied a report that they are nearing an interim agreement under which Tehran will curtail its nuclear program in exchange for sanctions relief.
Meanwhile, China's latest data signaled a worsening outlook for oil demand According to a report by the National Bureau of Statistics (NBS), inflation remained close to zero in May, giving fresh evidence that the world's second largest economy was cooling further. A separate report showed that China's onshore crude inventories hit a two-year high in May amid weak demand. Consumption in China has stagnated at the same time as processors have idled facilities for spring maintenance.
A further drop in prices was limited by expectations of production cuts. On Sunday, Saudi Arabia said it would cut oil production by 1 million barrels per day in July, in addition to the broader deal to limit supplies until 2024, as OPEC+ aims to raise oil prices.
Overall, experts note that factors such as fears over tighter supply and higher demand as the US enters driving season which could drive prices higher were being offset by worries over a slow pickup in China's fuel demand.