Oil prices slide on stronger dollar, outlook to further rate hikes
Oil prices dip Thursday morning on a stronger US dollar, while potential interest rate hikes from central banks around the world are fueling anticipation about weak demand, reports Reuters.
A barrel of European reference oil Brent trades for USD 82.05 Thursday morning CET, down 0.8% against Wednesday afternoon, while US benchmark crude West Texas Intermediate has slid by 1% against closing trading hours yesterday.
Both refence prices fall in step with the US dollar gaining relative exchange value. A stronger US dollar makes oil more expensive for holders of other currencies.
Oil prices are also affected by the US Federal Reserve having recently signaled plans to raise interest rates by a half basis point.
”The oil price is under pressure today as the Fed’s hawkish guidance for its monetary policy sparked renewed concerns about economic growth, lifting the US dollar and sending commodity prices down,” the news agency cites CMC Markets analyst Tina Teng noting.
New figures from the world’s second-largest economy, China, show both waning factory productivity and ebbing retail sales – factors Teng says put further downward pressure on the cost of crude, supply of which is also influenced by Canada’s TC Energy Corp.’s announcement of the Keystone pipeline partially resuming operation after being closed for a week due to a rupture that resulted in 14,000 barrels spilling into Kansas’ environment.
Meanwhile, US oil inventories increased with more than 10 million barrels last week, marking the largest weekly gain since March of 2021, show figures from the US Energy Information Administration.
Gasoline stockpiles also surged with 4.5 million barrels to 223.6 million barrels, while distillates on store jumped with 1.4 million barrels to 120.2 million barrels.
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