Investing.com– Oil prices fell slightly on Monday, coming under pressure from a stronger dollar amid signs of resurgent U.S. inflation, while concerns over slowing Chinese growth also dented sentiment.
Losses in crude markets were limited as recent production cuts by Saudi Arabia and Russia pointed to tighter markets. Crude prices remained close to their strongest levels for the year.
But while oil prices had a strong rally over the past two months, they faced some resistance in recent weeks as markets questioned the outlook for oil demand, amid worsening conditions in China and potentially higher U.S. interest rates.
fell 0.1% to $86.61 a barrel, while fell 0.2% to $83.03 a barrel by 21:58 ET (02:58 GMT).
Dollar buoyed by stronger inflation
The was the biggest source of pressure on oil markets, with the greenback sitting at a five-week high after higher inflation readings from last week.
Data on Friday showed that U.S. grew more than expected in July, coming just a day after data showed grew in July.
Higher inflation gives the Federal Reserve more impetus to hike interest rates, which in turn brightens the outlook for the dollar. A stronger dollar dents the prices of commodities priced in the greenback, and also hurts oil demand among international buyers.
U.S. retail sales data is also due this week, and is expected to shed more light on consumer spending in the world’s largest fuel consumer. Higher spending could potentially factor into inflation.
China concerns weigh, more data awaited
Concerns over an economic slowdown in top oil importer China also weighed, following a string of weak economic readings from the country over the past two weeks.
While government officials have promised to roll out more stimulus measures to support growth, they have provided few actual details on how said stimulus will be unlocked.
Concerns over China’s beleaguered property market also cast a pall over sentiment, as one of the country’s largest real estate developers grapples with a potential debt default.
Focus this week is now on and data, due on Tuesday. Both readings are expected to have declined further in July.