Oil prices declined on Monday in a volatile session as bearish economic news from the U.S. and Germany countered the bullish impact of a weaker U.S. dollar and increased heating demand due to a winter storm. Brent crude dropped 21 cents (0.3%) to $76.30 a barrel, while WTI fell 40 cents (0.5%) to $73.56. Despite the declines, both benchmarks remained in overbought territory, with recent gains driven by expectations of fiscal stimulus in China. Open interest in WTI futures surged to its highest level since June 2023.
The U.S. reported a decline in new orders for manufactured goods in November, signaling a slowdown in business spending, while Germany experienced higher-than-expected inflation in December, driven by food prices and smaller energy price drops. Analysts suggest oil markets will face low demand growth potentially outpaced by new supply from the U.S. and OPEC, with geopolitical tensions continuing to influence prices.
Earlier in the day, crude prices rose as natural gas spiked 10% due to the winter storm, and diesel futures hit their highest since October 7. A 1.1% drop in the U.S. dollar initially boosted oil prices before the dollar pared losses. In China, the yuan weakened against the dollar amid trade concerns, while Saudi Aramco raised crude prices for Asian buyers in February, signaling stronger demand expectations. Sudan also lifted a force majeure on crude oil transport from South Sudan, reflecting improved security conditions.