Oil dips marginally on Monday morning as concerns about the Chinese economy and a stronger greenback overshadow seven weeks of price gains due to production cuts from Saudi Arabia and Russia.

A barrel of the European Brent crude futures costs USD 86.05 on Monday morning, compared to USD 86.81 on Friday afternoon. At the same time, US benchmark West Texas Intermediate (WTI) trades at USD 82.46, compared to USD 83.24 .

According to the Reuters news agency, the price drops are due to the US dollar index getting a boost from the fact that producer prices in the US in July rose more than expected. A stronger dollar can help reduce oil demand as it becomes more expensive for other currency holders to buy oil in US dollars.

Tina Teng, an analyst at CMC Markets, told Reuters that oil prices this week are likely to remain near current levels. This is because China’s faltering post-corona economic recovery and a stronger US dollar are lowering oil prices. At the same time, the Organization of the Petroleum Exporting Countries and its allies, OPEC+, indicate that they are willing to cut oil output even further to ensure tight supply, pushing oil prices upwards.

”Crude has been in overbought territory for some time now, defying expectations of a correction. It has been singularly focused on U.S. economic optimism, to the exclusion of the increasingly stronger headwinds blowing in the eurozone and China,” Vandana Hari, founder of research firm Vanda Insights, told the news agency.

In the rest of the commodities market, a troy ounce of gold cost USD 1912.21 on Monday morning, compared to USD 1917.49 on Friday afternoon.

(Translated using DeepL with additional editing by Simon Øst Vejbæk)