Oil Lower as Dollar Rises

NEW YORK (DTN) -- New York Mercantile Exchange oil futures retreated Monday morning on the back of an anticipated weaker stock market open, a stronger U.S. dollar, weak Chinese economic data and a lingering global oil supply glut.

China's data released over the weekend showed a decline in industrial profits, which bodes ill for its energy demand.

At 8 a.m. CDT, NYMEX November WTI crude futures were down 94 cents at $44.76 barrel after posting a two-day spot low of $44.49. ICE November Brent crude oil futures were down 90 cents at $47.70 bbl, off a two-day low of $47.60.

NYMEX October ULSD futures were off 2.45 cents at $1.4980 gallon, off a four-day low of $1.4950. NYMEX October RBOB futures slipped 2.64 cents to $1.3695 gallon, near a two-day low of $1.3671.

On Wall Street, U.S. stock indices opened 0.5% lower on risk-off trade, with the dollar remaining near a one-month high. The stock market is a gauge for investor sentiment, so today's weakness suggests a bearish outlook.

The U.D. dollar index edged up after U.S. Department of Commerce data showed personal spending rose by a more-than-expected 0.4% in August while personal income increased by a less-than-expected 0.3% for the month.

Recent data showed a healthy U.S. economy.

The dollar's upside move was also underpinned by Federal Reserve officials making the case of a hike in short-term interest rates.

New York Federal Reserve President Bill Dudley Monday morning reiterated the Fed will probably hike rates this year, if the economy remains on track.

Fed Chair Janet Yellen last week said interest rates are likely to be raised later this year since the U.S. economy is resilient.

On supply, Kuwait's Oil Minister Ali al-Omair said an emergency summit of the Organization of the Petroleum Exporting Countries before the next scheduled meeting in December is unlikely. OPEC production has been above its agreed-to official ceiling of 30 million bpd for most of this year.

OPEC is scheduled to hold its biannual summit on December 4 to reassess market conditions.

OPEC refused in November 2014 and in June 2015 to cut its oil output despite the glut in global supply. The move, which sent prices sliding further, was viewed as a tactical attempt to discourage non-OPEC producers, particularly U.S. shale oil producers which have higher costs.

The tactic worked as U.S. oil production has been gradually decreasing but oil prices have failed to post a significant recovery.

The total U.S. oil rig count decreased by four to 838 last week, Baker Hughes said in a report Friday, with rigs in operation down 1,093 from a year ago.

George Orwel can be reached at george.orwel@telventdtn.com