LONDON - Oil fell below $75 a barrel on Monday as rising risk aversion weighed on stock markets and boosted the U.S. dollar, although crude pared earlier losses on signs that some U.S. Gulf output will stay offline for months due to storm damage.
The dollar, seen as a safe haven, rose as worries about Chinese property developer Evergrande's solvency spooked equity markets and investors braced for the Federal Reserve to take another step towards tapering this week. USD/
"Far East stock markets and the strong dollar are affecting oil," said Tamas Varga of oil broker PVM. "Nonetheless, unless all hell breaks loose, the positive sentiment ought to prevail."
Brent crude fell 92 cents, or 1.2%, to $74.42 a barrel at 1340 GMT, having dropped as low as $73.58 earlier in the session. U.S. West Texas Intermediate (WTI) declined $1.06, or 1.5%, to $70.91.
A stronger greenback makes U.S. dollar-priced oil more expensive for holders of other currencies and generally reflects higher risk aversion, which tends to weigh on oil prices.
Brent has gained 43% this year, supported by supply cuts by the Organization of the Petroleum Exporting Countries and allies, and some recovery in demand after last year's pandemic-induced collapse.
Oil had gained additional support from supply shutdowns in the U.S. Gulf of Mexico due to two recent hurricanes. As of Friday producing companies had just 23% of crude production offline, or 422,078 barrels per day.
Crude pared its decline on Monday after Shell said it expects an installation in the Gulf of Mexico to be offline for repairs until the end of 2021 due to damage from Hurricane Ida.
The facility serves as the transfer station for all the output from the company's assets in the Mars corridor of the Mississippi Canyon area to onshore crude terminals.
(Reporing by Alex Lawler; Additional reporting by Sonali Paul in Melbourne, and Roslan Khasawneh and Koustav Samanta in Singapore; Editing by Tom Hogue, Emelia Sithole-Matarise, Jan Harvey and Alexander Smith) ((email@example.com; +44 207 542 4087; Reuters Messaging: firstname.lastname@example.org))