Oil prices fall 2 pct on strong dollar, weak China data

Markets Reuters

An oilfield drilling rig, belonging to Precision Drilling, works on a well for Crescent Point Energy in the background as two pumpjacks, also belonging to Crescent Point Energy, pump crude oil in the foreground near Shaunavon, Saskatchewan on Aug. 26,... 2016. (Larry MacDougal via AP)

Oil prices tumbled 2 percent on Monday in volatile trade, as the dollar strengthened and China posted weak domestic demand data, sinking prices that had gotten a short-lived boost on concerns about potential reductions in crude supply from Libya.

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Global benchmark Brent crude futures were at $51.01 a barrel by 1:56 p.m. EDT (1714 GMT), down $1.09 from Friday's close. They touched a low of $50.91 earlier in the session.

U.S. West Texas Intermediate crude futures were trading at $47.87, down 95 cents a barrel.

"It is a strong dollar, concern about China demand, and weak volumes," said Phil Flynn, an analyst with Price Futures Group in Chicago.

The dollar rose broadly as traders unwound bearish bets against the U.S. currency that have come in the wake of increasing tensions with North Korea and underwhelming inflation data.

The absence of further abrasive rhetoric by U.S. President Donald Trump and North Korean leader Kim Jong Un over the weekend helped bring investors back to the dollar, analysts said.

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Oil prices fell on news that refinery runs in China dropped in July.

Analysts said the drop was steeper than expected, exacerbating concerns that a glut of refined fuel products could weaken Chinese demand for oil.

Efforts by the Organization of the Petroleum Exporting Countries and other oil producers to limit output have helped lift Brent past $50 a barrel.

Trade was volatile, with prices falling early on the Chinese demand data, then retracing losses after Libya's national oil corporation said it was investigating security violations at the country's largest oil field. A disruption from the 270,000 bpd Sharara field could cut supplies from producer group OPEC. The NOC did not specify whether the violations had affected output at the field.

Rising production in Libya has added to the global crude glut. The OPEC member country is exempt from the global deal to cut output and has been trying to regain pre-war production levels. 

(By Jessica Resnick-Ault; Additional reporting by Henning Gloystein in Singapore and Karolin Schaps in Amsterdam; Editing by Dale Hudson and David Gregorio)

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