Donald Trump andRecep Tayyip Erdogan. AFP / Brendan Smialowski & Gianluigi Guercia
Crude slid as economic turbulence in Turkey and the strengthening greenback heightened concerns about global oil demand.
Futures fell as much as 0.7 percent in New York on Monday. In Turkey, an economy that’s larger than the Netherlands or Taiwan, bonds and stocks dropped along with the currency as investor confidence plunged. Meanwhile, OPEC raised production and the strengthening dollar diminished the buying power of developing economies.
"It’s a strong dollar situation. That reverse correlation is putting pressure on the barrel for starters,” said Bob Yawger, director of futures division at Mizuho Securities USA LLC. "Perceptions about emerging-market demand are also going to be negative for the energy complex.”
The U.S. benchmark crude has declined more than 2 percent this month as international trade disputes threatened to deflate energy demand growth. Turkey’s central bank pledged to "take all necessary measures” to bolster the financial system, lowering the amount commercial lenders must park at the regulator and easing rules governing lira and foreign-currency liquidity.
"The key risk to oil is the contagion risk to other emerging markets, especially those representing a major share of demand growth,” said Ole Sloth Hansen, head of commodity strategy at Saxo Bank A/S. Traders "are most certainly looking for Turkey to contain the situation and come up with viable solutions.”
West Texas Intermediate crude for September delivery slid 38 cents to $67.25 a barrel at 9:53 a.m. on the New York Mercantile Exchange. Total volume traded was about 39 percent below the 100-day average.
Brent for October settlement declined 29 cents to $72.52 a barrel on the London-based ICE Futures Europe exchange, and traded at a $5.98 premium to WTI for the same month.
The Bloomberg Dollar Spot Index rose for a third straight session, advancing as much as 0.3 percent on Monday.
OPEC’s output averaged 32.32 million barrels a day in July, up 41,000 barrels a day from June, the cartel said in a report citing secondary source figures. The group also lifted forecasts for supply from rivals for the rest of the year.
Other oil-market news:
Gasoline futures fell 0.5 percent to $2.0293 a gallon.
Royal Dutch Shell Plc said its head of global manufacturing, a business that includes refineries and chemicals plants, will step down at the end of August.
