Oil prices dropped roughly 2% in Monday’s trade, as investors decided become a little more conservative, which not only hurt stock markets but also strengthened the the U.S. dollar, making oil more expensive for holders of other currencies. West Texas dropped $1.68 Monday to end the day at $70.29 per barrel.
Fatih Birol, Executive Director at IEA, told Bloomberg this week he’s watching the impact the Paris Climate agreement is having and will continue to have on the oil industry. He noted that many of the wealthiest counties, including the U.S., Canada, China and Japan, have all pledged to greatly reduce carbon emissions by 2050. But he noted the data does not indicated progress is being made.
“According to our numbers, our analysis, this year again we are seeing the second highest increase in global emissions in history. So, what I’m seeing is there is a growing, a widening gap between the rhetoric, what governments say, and what is happening in the markets in real life. This is something that I think is we all have to take a note of.”
Those counties account for roughly 75% of the global GDP.
Another factor driving the dollar higher is growing concerns over the health of the Chinese economy, and specifically property developer Evergrande’s solvency. There is growing concern the Federal Reserve will take actions later this week.
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