Forexpros – Crude oil futures extended sharp losses from the previous session on Monday, dropping to a four-day low as the dollar strengthened amid fears that Greece will default on its debts.
On the New York Mercantile Exchange, light, sweet crude futures for delivery in October traded at USD85.41 a barrel during European morning trade, tumbling 2.1%.
It earlier fell as much as 2.55% to trade at USD85.02 a barrel, the lowest price since September 6.
Concerns over a Greek debt default were mounted after weekend media reports that Germany’s Finance Ministry was studying the impact of a possible Greek default, including a scenario in which the debt-laden country exited the euro zone and reintroduced the drachma.
The news saw risk aversion sharpen, boosting the greenback and weighing heavily on riskier assets, such as stocks and commodities.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, gained 0.43% to trade at 78.05, the highest since February 22.
Oil prices typically weaken when the U.S. currency strengthens as the dollar-priced commodity becomes more expensive for holders of other currencies.
Elsewhere, Tropical Strom Nate weakened to a post-tropical cyclone after making landfall in central-eastern Mexico on Sunday, away from the oil-rich Gulf of Mexico region.
Oil majors British Petroleum and Exxon said workers were returning to oil facilities in the western Gulf, after being evacuated before the weekend.
Approximately 6% of oil output in the Gulf remained shut-in as of Friday, according to the U.S. Bureau of Ocean Energy Management, compared with 27% a week earlier.
Elsewhere, on the ICE Futures Exchange, Brent oil futures for October delivery dropped 1.85% to trade at USD108.89 a barrel, up USD23.48 a barrel on its U.S. counterpart.
Brent prices came under pressure after Libya’s interim Prime Minister Mahmoud Jibril said on Sunday that the country re-started oil production over the weekend and promised more would come online in the “near future.”
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