Crude oil prices plunged close to 2 percent on Monday as fears of further monetary tightening by the Fed triggered worries about economic growth and the potential demand for crude oil. Weak PMI data from China exacerbated the negative sentiment, draining out the euphoria surrounding OPEC's output cut that took effect this month.
The CME FedWatch tool, currently indicates that markets have priced in an 89.5 percent probability for a 25-basis points rate hike by the Fed in the forthcoming review on Wednesday. The same was 83.9 percent a day earlier and 90.5 percent a week earlier.
Data released from China on Saturday had shown NBS Manufacturing PMI fall to 49.2, from 51.9 in the previous month and expectations of 51.4 percent. Services PMI dropped to 56.4 from 58.2 earlier.
Amidst rate hike worries, Dollar Index (DXY), a measure of the Dollar's strength against a basket of 6 currencies, gained 0.23 percent overnight to 101.90.
Brent Oil Futures for July settlement traded between $78.58 and $79.86. It is currently at $78.78, down 1.93 percent from the previous close.
West Texas Intermediate Crude Oil Futures for June settlement too traded tight, between a high of $76.69 and a low of $75.02. The current price of $75.15 represents a loss of 2.12 percent from the previous close.
