Oil down 1% on strong dollar, China economy worries
Brent crude futures slipped 93 cents, or about 1.1% to $86.46 a barrel by 1237 GMT while U.S. West Texas Intermediate crude fell $1.03, or roughly 1.2%, to $82.81 a barrel.
"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," said Vandana Hari, founder of oil market analysis provider Vanda Insights.China's sluggish economic recovery and a stronger U.S.
A stronger dollar pressures oil demand by making the commodity more expensive for buyers holding other currencies. Meanwhile, supply cuts by Saudi Arabia and Russia, part of the alliance between the Organization of the Petroleum Exporting Countries and their allies, or OPEC+, are expected toover the rest of this year, potentially driving prices even higher, the International Energy Agency said in its monthly report on Friday.
Last week’s encouraging demand estimates, falling OPEC supply, declining inventories and mitigated inflationary pressure, said Tamas Varga of oil broker PVM, "is a warning signal that unless China joins the party the path upwards will be paved with pitfalls".
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