Rising chances of a US interest rate hike in September driving up the value of the dollar have put pressure on oil prices today.
International Brent crude fell one and a half per cent to $49.19 per barrel at the market open in New York as a stronger dollar weighed on commodities and inventories remain well stocked by high output from Opec members.
The global benchmark is down over six per cent from its 2016 peak of $52.86 two months ago.
US oil dropped a similar amount to trade around $46.94.
The ICE dollar index rose 0.1 per cent to 95.621, building on a 0.8 per cent rise from Friday.
A rise in US interest rates – which could push the dollar higher – would not bode well for dollar-priced oil products that would become more expensive for oil traders who hold a different currency.
Yellen said gradual increases in interest rates were “appropriate” and the case for another had “strengthened” following positive economic data on the US economy.
Supply pressure continues
Meanwhile, the Organization of the Petroleum Exporting Countries (Opec) is slated to have an informal meeting next month to discuss the oil markets.
Hopes are not high that a deal can be reached at the meeting however. Iraq's oil minister said on Saturday it will continue ramping up output.
Earlier this month concerns about increased exports from China, Iraq, and Nigeria, as well as a rising US rig count dragged on the oil price.
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Iraq said yesterday it will increase crude exports by around five per cent now it has reached an agreement to resume shipments from three Kirkuk oil fields.
This will be an increase of around 150,000 barrels of oil per day from Opec's second largest producer.
Global oil majors continue to struggle with the relatively low oil price – still more than 50 per cent under its summer of 2014 highs, with debt climbing to record levels.
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