Oil dips as dollar firms up and more rate hikes trigger demand concerns

Oil prices dipped in Asian trade on Thursday as the dollar firmed, while the possibility of further interest rate hikes from global central banks also heightened demand concerns.

Brent crude futures fell 64 cents, or 0.8%, to $82.06 per barrel by 0730 GMT, while U.S. crude futures slid 73 cents, or 0.9%, to $76.55.

Both contracts fell as the dollar gained. A stronger dollar weakens oil demand as it makes the commodity more expensive for those holding other currencies.

Federal Reserve Chair Jerome Powell said on Wednesday the U.S. central bank will raise interest rates further next year, even as the economy slips towards a possible recession.

“Oil price is under pressure today as the Fed’s hawkish guidance for its monetary policy sparked renewed concerns about economic growth again, lifting the U.S. dollar and sending commodity prices down,” said Tina Teng, an analyst at CMC .

Chinese economic data for November were “much lower than expected, further darkening the demand outlook,” Teng added.

The world’s second-biggest economy lost more steam as factory output slowed and retail sales extended declines, both missing forecasts and clocking their worst readings in six months amid surging COVID-19 cases.

Also weighing on oil prices, Canada’s TC Corp said it is resuming operations in a section of its Keystone pipeline, a week after a leak of more than 14,000 barrels of oil in rural Kansas triggered the whole pipe’s shutdown.

Price declines were capped by projections from the International Agency, which see Chinese oil demand recovering next year after a contraction this year of 400,000 barrels per day.

Meanwhile, U.S. crude oil stockpiles rose by more than 10 million barrels last week, the most since March 2021, the Information Administration (EIA) said. [EIA/S]

U.S. gasoline stocks rose by 4.5 million barrels in the week to 223.6 million barrels, while distillate stockpiles rose by 1.4 million barrels to 120.2 million barrels.

“Commercial crude oil inventories rose as refineries trimmed their runs,” said Citi analysts in a note.

Refined product inventories also rose robustly as end-user demand continues to taper off in light of high energy prices and net exports of refined products rose, the analysts wrote.

(Reporting by Jeslyn Lerh in Singapore; Additional reporting by Laura Sanicola in Washington; Editing by Bradley Perrett and William Mallard)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

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