Oil prices slide as dollar gains and China frets over virus
Oil prices dip Tuesday as a strengthened US dollar and new Covid-19 cases in China prompt concerns about lower global fuel demand, reports Reuters.
A barrel of European reference oil Brent trades for USD 96.00 Tuesday morning CEST against USD 97.45 Monday afternoon. US benchmark crude West Texas Intermediate sells concurrently for USD 90.84 relative to USD 92.35.
The greenback has strengthened further as of Tuesday morning as central banks continue hiking interest rates and geopolitical tensions keep spooking investors.
A stronger US dollar makes oil transactions more expensive for traders holding other currencies, thereby resulting in less demand.
Moreover, the US Federal Reserve is expected to raise rates even higher, thereby further compounding market development.
”Strong jobs data has strengthened expectations of another 75 basis points rate hike at next month’s Fed meeting, leaving downside risk for global oil demand,” ANZ Research analysts write in a note, cites the news agency.
Running parallel to the above, Covid-19 infection figures are at their highest since August in China, the world’s second-largest oil consumer – also a factor squeezing oil prices Tuesday.
Crude prices have otherwise been supported by the Organization of Petroleum Exporting Countries and OPEC+ allies reducing output quotas with by million barrels per day.
”More critical is the bullish signal OPEC+ sends here by responding to short-term market dynamics and trying to stabilize or raise prices despite the medium view that demand growth will outpace supply growth for the remainder of the year,” Reutes cites Stephen Innes, managing partner at SPI Asset Management, as saying.
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