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Brent futures for November settlement fell to around $84.53 early in the day, before recovering to trade around $87 by 11 a.m. on Wall Street for a gain of 1%. West Texas Intermediate futures rose 1.2% to trade at $79.62 per barrel. Earlier in the session the contract hit a session low of $77.21, a price last seen on January 6.
On Friday, both Brent and WTI futures fell around 5%.
The surge against other currencies means dollar-denominated assets such as oil have grown more expensive for investors holding foreign currencies and “have weighed on futures prices,” according to John Morley, associate editorial director for EMEA crude and fuel oil at S&P Global.
Investment bank Saxo’s strategy team said market sentiment was continuing to deteriorate.
“The unrelenting pressure on commodities, including crude oil, continues following Friday’s gloomy session which saw accelerated dollar strength and growth pessimism cause a ripple through markets,” Ole Hansen, Head of Commodity Strategy at Saxo said.
“WTI trades below $80 per barrel while a return to the mid-80’s in Brent may soon see OPEC+ action to support prices,” he said.
As Russia warned it will not supply commodities to nations agreeing to cap prices for its crude and markets anticipate a recession, “the energy sector could be the first to find support once the dollar stabilises,” Hansen said.
Fears around an economic slowdown continue to mount, with Steve Hanke, professor of applied economics at Johns Hopkins University, putting the chance that the U.S. will fall into recession at 80%.
“If [the Fed] continue[s] the quantitative tightening and move that growth rate and M2 (money supply) into negative territory, it’ll be severe,” Hanke told CNBC’s “Street Signs Asia” on Friday.
Read More: Brent crude slides below $85 a barrel as dollar surges