Investing.com -- Oil prices retreated Monday, extending last week’s steep drop on concerns that rising interest rates in the western economies will hit economic activity and thus the outlook for fuel demand.
By 09:10 ET (13:10 GMT), U.S. crude futures traded 0.8% lower at $77.28 a barrel, while the Brent contract fell 0.8% to $80.81 a barrel.
Both benchmarks fell more than 5% last week for their first weekly declines in five. They have now wiped out nearly all of the gains seen after the Organization of Petroleum Exporting Countries and its allies announced a surprise reduction in output at the start of the month.
The major western central banks – be it the Federal Reserve, the Bank of England or the European Central Bank – are all expected to raise interest rates when they meet next week, seeking to tackle stubbornly high inflation.
The focus is mainly on the U.S., the largest consumer of crude in the world, amid fears of a recession in the latter half of the year.
The latest figures on jobs, growth, and inflation will be released later this week, and will provide the Federal Reserve with clues of the current strength of the U.S. economy before its May policy meeting.
However, it’s not all bad news.
Data released in China on Friday showed that the world's top crude importer brought in record volumes in March, while the latest government data from India showed that domestic refiners processed a record amount of crude oil in March.
“As a result, it is not surprising that stronger crude oil imports were also observed,” said analysts at ING, in a note.
Additionally, the ICE Brent contract saw speculators increase their net long positions by almost 8,000 lots to 241,987 lots last week, despite the contract settling lower.
“This move was predominantly driven by fresh longs, suggesting that some market participants feel that oil is underpriced at the moment,” added ING.