Global uncertainty concerning recession continued to dictate the price of commodities, especially crude oil which has now declined for a second trading session on Monday.
Brent crude oil, against which Nigerian oil is priced, slipped by $1, or 1.2%, to $85.15 a barrel at 11:36 a.m Nigerian time on Tuesday. Brent crude dipped as low as $84.51, the lowest since Jan. 14.
U.S. West Texas Intermediate (WTI) crude shed 87 cents, or 1.1%, to $77.87 a barrel. WTI dropped as low as $77.21, the lowest since Jan. 6.
Brent and WTI slumped by about 5% on Friday.
The dollar index that measures the greenback against a basket of major currencies climbed to a 20-year high on Monday.
A stronger dollar tends to curtail demand for dollar-denominated oil.
Meanwhile, interest rate increases imposed by central banks in numerous oil-consuming countries to fight surging inflation has raised fears of an economic slowdown and accompanying slump in oil demand.
“A backdrop of global monetary policy tightening by the key central banks to quell elevated inflation, and a splendid run-up in the greenback towards more than two-decade highs, has raised concerns about an economic slowdown and is acting as a key headwind for crude prices,” said Sugandha Sachdeva at Religare Broking.
Disruptions in the oil market from the Russia-Ukraine war, with European Union sanctions banning Russian crude set to start in December, has lent some support to prices.
Attention is turning to what the Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia, together known as OPEC+, will do when they meet on Oct. 5, having agreed at their previous meeting to cut output modestly.
However, OPEC+ is producing well below its targeted output, meaning that a further cut may not have much impact on supply.
Data last week showed OPEC+ missed its target by 3.58 million barrels per day in August, a bigger shortfall than in July.