Investing.com - Brent oil futures traded near the lowest level in almost two years on Monday, amid speculation weakening economic growth in China will reduce demand for the commodity.
On the ICE Futures Exchange in London, Brent oil for November delivery dropped to a session low of $97.02 a barrel, a level not seen since April 18, 2013. Prices were last at $97.29 during European morning hours, down 67 cents, or 0.68%.
Elsewhere, on the New York Mercantile Exchange, crude oil for delivery in November slumped to a daily low of $89.90 a barrel. Futures recovered to last trade at $90.60, down 77 cents, or 0.84%.
Oil prices started the week lower after data released on Saturday showed that China's factory output grew at the weakest pace in nearly six years in August, adding to concerns over a slowdown in the world’s second largest economy.
Industrial production rose at an annualized rate of 6.9% in August, missing estimates for a gain of 8.8% and slowing from an increase of 9.0% a month earlier.
Fixed asset investment, which tracks construction activity, rose 16.5% in the January-August period, below expectations for a gain of 16.9% and slowing from 17.0% in the January-July period.
The weaker than expected data underlined concerns about China's economy and sparked speculation policymakers in Beijing will have to introduce fresh stimulus to meet the government's 7.5% growth target.
China is the world's second largest oil consumer after the U.S. and has been the engine of strengthening demand.
A broadly stronger dollar also weighed, as expectations for an early hike in U.S. interest rates continued to bolster investor demand. The greenback traded close to a 14-month high versus a basket of six other major currencies.
Oil prices typically weaken when the U.S. currency strengthens as the dollar-priced commodity becomes more expensive for holders of other currencies.
In the week ahead, investors will be focusing on the outcome of Wednesday’s Federal Reserve policy meeting, amid speculation the central bank could adopt more hawkish language, possibly by omitting mention of its commitment to keep rates low for a "considerable time".
The Fed was expected to cut its asset purchase program by another $10 billion, which would keep it on track for winding up the program in October, and to start raising interest rates sometime in mid-2015.