Brent Price Nears $85 as Demand Spikes, Dollar Rallies
The crude oil market continues to boom amidst the expectation of an increased dollar inflow for crude exporting countries. Early morning on Tuesday, Brent price nears $85 a barrel amidst inflation fear in the United States. But demand is on the rise amidst global economic recovery.
The rising global price of oil is putting pressure on energy costs in the United States and other heavily dependent importing countries with dollar gaining weight in the foreign exchange markets.
West Texas Intermediate crude oil prices soared to seven-year highs, spooking US equity markets overnight, with concerns that the third-quarter earnings season will contain tempered expectations for 2022, said Jeffrey Halley, senior market analyst for the Asia Pacific at foreign exchange company OANDA.
The S&P 500 retreated by 0.69%, the NASDAQ lost 0.64% and the Dow Jones fell 0.72% on Monday. Futures on all three indexes slumped by around 0.50% in Asia, according to Halley.
The US dollar rose overnight and continues its rally due in part to the ongoing energy price surge. Higher energy prices boost demand for the US dollar as internationally, energy is mostly priced and transacted in US dollars, Halley said.
The dollar index rose 0.27% to 94.36 where it remains in Asia. Oil prices were higher overnight with Brent crude approaching $85 per barrel and WTI nearing $82/bbl as the Asia rally continued into the US.
In Asia, prices were nearly unchanged, which could be attributed partly to the short-term technical indicators entering an overbought territory, Halley noted.
“Combined with reports of huge, long speculative positioning in the futures markets, it would not surprise me in the least, if we saw a sharp sell-off of $5 to $8 a barrel at some stage this week,” Halley said. # Brent Price Nears $85 as Demand Spikes, Dollar Rallies
Read Also: Dangote Petrochemical Plant Nears Completion, Says Official
