Oil Prices Drop to Three-Week Low

Oil prices fell to a three-week low on Monday, hurt by a stronger U.S. dollar and troubling signs of lower demand.

Light, sweet crude for September delivery settled down $1.23, or 2.5%, to $47.59 a barrel on the New York Mercantile Exchange, its biggest one-day loss in over a month and the lowest close since July 24. Brent, the global benchmark, lost $1.37, or 2.6%, to $50.73 a barrel.

July data showing a drop in crude demand from Chinese refiners put pressure on the market Monday, analysts said. According to Guttman Energy, the amount of product refined in China in July was at the lowest monthly level since September 2016.

A stronger dollar also weighed on oil prices, analysts noted. The WSJ Dollar Index, which measures the U.S. currency against 16 others, rose 0.3% to 86.25.

Prices reversed gains from earlier in the day, after U.S. oil futures traded as high as $49.16 a barrel. Oil has been susceptible to bearish sentiment despite a recent rally, as investors have remained doubtful of the global oil cartel's ability to ease a yearslong glut.

"One day of data is not enough of a shift to impact oil prices in either direction," said Dominick Chirichella, an analyst at the Energy Management Institute, in a Monday note. "However, it does demonstrate the high level of uncertainty and skepticism that continues to engulf the global oil markets."

Oil has treaded water in recent weeks as investors assess supply and demand figures to determine how close the oil market is to global rebalancing. U.S. crude inventories have steadily declined over the past two months, helping to support prices. However, uncertainty over U.S. shale activity and the Organization of the Petroleum Exporting Countries' output have capped gains at just under $50 a barrel.

"It's just a choppy market," said Jim Ritterbusch, president of energy-advisory firm Ritterbusch & Associates.

Since 2016, OPEC and a handful of nations outside the cartel have agreed to cut supply in an attempt to boost prices and help rebalance the market. However, recent data show that compliance among participants has been slipping.

"We are just waiting and watching. I think a lot of people are doing that. We don't really know what to do," said Mark Waggoner, president of Excel Futures. "We're trying to short rallies on crude, I think that's the way to go," added Mr. Waggoner, who said he is waiting for oil to rise above $50 a barrel before taking a short position.

Gasoline futures fell 2.3% to $1.5767 a gallon and diesel futures fell 1.8% to $1.6057 a gallon.

Write to Stephanie Yang at stephanie.yang@wsj.com and Neanda Salvaterra at neanda.salvaterra@wsj.com

(END) Dow Jones Newswires

August 14, 2017 17:54 ET (21:54 GMT)