Oil retreated as the dollar strengthened, with the steam coming out of a recent rally, even as President-elect Joe Biden proposed a huge US stimulus package and China’s economic recovery gathered pace.
Futures in New York lost 0.8% as a stronger dollar reduced the appeal of raw materials like oil that are priced in the currency. Both West Texas Intermediate and Brent crude are trading in overbought territory, according to the 14-day relative strength index, signalling prices are due for a correction.
Crude rallied late Friday after Biden proposed trillions of dollars in stimulus to counter the economic toll of the coronavirus outbreak, adding to a weekly gain underpinned by Saudi Arabia’s pledge for deeper output cuts. The kingdom also increased its oil prices to Asia, which was followed by Iraq and Abu Dhabi.