Oil dropped more than $1 a barrel to below $75 on Monday as rising risk aversion weighed on stock markets and boosted the U.S. dollar, while more U.S. Gulf oil output came back online in the wake of two hurricanes.
The dollar rallied to its highest in a month on Monday as pending catastrophe at developer China Evergrande added to a cautious mood and as investors braced for the Federal Reserve to take another step towards tapering this week.
Brent crude fell 76 cents to $74.58 having dropped as low as $74.26 earlier in the session. U.S. West Texas Intermediate (WTI) declined 89 cents to $71.08.
Oil had gained additional support from supply shutdowns in the U.S. Gulf of Mexico due to the two recent hurricanes, but as of Friday producing companies had just 23% of crude production offline, or 422,078 barrels per day.
A stronger dollar 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.