Investing.com - Crude futures edged lower on Monday after news that Japan has entered a recession fueled demand for the U.S. dollar, a safe-haven asset class.
A stronger greenback makes oil a less attractive commodity on dollar-denominated exchanges, especially in the eyes of investors holding other currencies.
Investors also grew concerned that a more sluggish Japanese economy will consume less fuel and energy.
In the New York Mercantile Exchange, West Texas Intermediate crude oil futures for delivery in January traded down 0.49% at $75.45 a barrel during U.S. trading, up from a session low of $74.76 a barrel and off a high of $76.14 a barrel.
The January contract settled up 2.24% at $75.82 a barrel on Friday.
Support for the commodity was seen at $73.22 a barrel, Friday's low, and resistance at $79.80 a barrel, last Monday's high.
Official data released earlier revealed that Japan’s gross domestic product contracted by an annualized 1.6% in the third quarter following a 7.3% drop in the preceding quarter, which puts the country in a recession.
Economists were forecasting a 2.3% growth rate, and the unexpected contraction sent oil prices dipping amid concerns that supply remains ample while demand remains soft.
Separately, Japanese Prime Minister Shinzo Abe was expected to postpone a planned sales tax increase due to come into effect next year after a sales tax hike in April of this year acted as a drag on growth.
The prime minister was also expected to call for snap elections which could take place as soon as next month.
The yen plunged on the news though it later recovered, though the dollar still saw broad support that came at oil's expense.
The yen often rises when Japanese stocks fall.
Elsewhere, news of Japan's recession offset mixed U.S. economic indicators.
The Federal Reserve reported earlier that industrial production contracted by 0.1% in October, disappointing expectations for a gain of 0.3%.
Industrial production for September was revised down to a gain of 0.8% from a previously reported increase of 1.0%.
In a separate report, the Federal Reserve Bank of New York said that its general business conditions index increased to 10.2 this month 6.2 in October. Analysts had expected the index to rise to 11.1 in November, though a reading above 0.0 indicates improving conditions, which gave the dollar support.
Separately, on the ICE Futures Exchange in London, Brent oil futures for January delivery were down 0.37% at US$79.12 a barrel, while the spread between Brent and U.S. crude contracts stood at $3.67.