(Yicai Global) Sept. 9 -- The price of benchmark crude oil futures on the Shanghai International Exchange fell by the daily limit of 8 percent yesterday as the strengthening dollar and full inventories cause investors to remain nervous about future demand.

Benchmark crude oil futures in Shanghai were trading at CNY251 (USD36.65) a barrel yesterday. International oil prices also fell sharply. Benchmark crude oil futures in the US due for delivery in October closed down 7.57 percent at USD36.76 per barrel.

Saudi Arabian oil major Saudi Aramco has lowered the price of crude oil to be exported to Asia and the US next month, intensifying market concerns that demand will crash after the summer peak ends, said Chen Tong, an energy and chemical industry analyst at First Futures.

On the upside, the recent production reduction agreement reached by the Organization of the Petroleum Exporting Countries is progressing well, Chen said. The implementation rate was 99 percent last month and 95 percent in July. But on the other hand, the Covid-19 pandemic is not yet under control and the US stock market has plummeted from historical highs, he added.

Gasoline consumption in the US tends to fall after the Labor Day holiday on Sept. 7, said Ma Chen, crude oil analyst at Guangzhou Futures. The China market is also saturated with crude oil inventories overflowing as the country took advantage of the falling oil prices in the first half to import record amounts.

The US dollar is also on the rebound after hitting a 28-month low, bringing US dollar-denominated crude oil prices up with it, Chen said. The dollar index rose for four consecutive days last week, its biggest weekly gain since June. If the greenback continues to appreciate, it will make crude oil and other commodities less attractive to foreign buyers.

Oil prices could still face downward risks in the near term if the dollar continues to gain, he added. But the oil market should rebalance in the medium and long term, and the price is expected to recover a little, he said.

Editor: Kim Taylor