SINGAPORE- Oil prices extended declines on Monday amid signs of weak fuel demand and as comments from US Federal Reserve officials dampened hopes of interest rate cuts, which could slow growth and crimp fuel demand in the world’s biggest economy.
Brent crude futures slid 25 cents, or 0.3 percent , to $82.54 a barrel, while US West Texas Intermediate crude futures were at $78.07 a barrel, down 19 cents, or 0.2 percent .
“Oil markets shrugged off the impact of the Middle East conflicts and shifted attention to the world economic outlook again,” Auckland-based independent analyst Tina Teng said.
China’s producer price index (PPI) contracted in April, suggesting that business demand remained sluggish, she said, adding that recent US economic data signaled a slowdown as well.
Both benchmarks settled about $1 lower on Friday as Fed officials debated whether US interest rates are high enough to bring inflation back to 2 percent , offsetting gains earlier last week from the Israel-Gaza conflict.
Analysts expect the US central bank to keep its policy rate at the current level for longer, supporting the dollar. A stronger greenback makes dollar-denominated oil more expensive for investors holding other currencies.
Oil prices also fell amid signs of weak demand, ANZ analysts said in a note, as US gasoline and distillate inventories rose in the week ahead of the start of the US driving season.
Refiners globally are struggling with slumping profits for diesel as new refineries boost supplies and as mild weather in the northern hemisphere and slow economic activity eat into demand.
