Advertisements

Oil Prices Dip Due to Strong Dollar Pressure

by Krystal

Oil prices dropped in Asian trading on Monday, as a stronger dollar kept pressure on the market while traders awaited further cues on U.S. inflation and interest rates for the week ahead.

Crude markets experienced some profit-taking after a robust two-week rally that saw a 3% increase in the prior week.

Advertisements

Brent oil futures expiring in August declined by 0.4% to $84.88 per barrel, while West Texas Intermediate crude futures also fell by 0.4% to $80.41 per barrel as of 21:21 ET (01:21 GMT).

Advertisements

The dollar’s strength impacted oil prices due to concerns about inflation. The dollar index rose by 0.1% on Monday, continuing its gains from the previous week as traders adjusted expectations for early interest rate cuts by the Federal Reserve. The dollar was near a two-month high against a basket of currencies.

Advertisements

The stronger dollar affects commodity prices that are priced in dollars, including oil. It also reduces international oil demand by increasing the cost of crude for foreign buyers. Additionally, the dollar received support from stronger-than-expected purchasing managers index data released on Friday.

Advertisements

This week’s focus is on the key PCE price index data, which is the Federal Reserve’s preferred inflation gauge. Expected to be released on Friday, it is anticipated to show inflation remaining above the Fed’s 2% annual target, potentially giving the central bank more room to maintain high-interest rates.

Oil prices have seen two weeks of gains, driven by positive demand signals and concerns over geopolitical tensions, which led traders to factor in a risk premium.

Encouraging U.S. data, such as unexpected decreases in oil inventories and improved gasoline demand, contributed to a more optimistic outlook for crude.

The escalating risk of a full-scale conflict between Israel and Hezbollah, stemming from the conflict with Hamas, has raised expectations of supply disruptions in the Middle East.

Ongoing tensions between Russia and Ukraine, including Kyiv’s targeting of major Russian refineries, have also raised concerns about potential supply disruptions.

Advertisements
Advertisements

You may also like

oftrb logo

Oftrb.com is a comprehensive energy portal, the main columns include crude oil prices, energy categories, EIA, OPEC, crude oil news, basic knowledge of crude oil, etc.

【Contact us: [email protected]

© 2023 Copyright oftrb.com – Crude Oil Market Quotes, Price Chart live & News [[email protected]]