Oil Prices Decline as Strong US Dollar Drags Demand
Crude oil prices in the internal market responded negatively to a slowdown in demand attributed to improved US dollar strength and persistent market concerns over China’s sluggish economy. The market was greeted with a demand surge early last week before a bearish mood set in. In spite, Nigeria’s river basin and Qua Iboe closed higher at $91.24, according to market data.
International benchmark Brent crude traded at $85.75 per barrel, a 1.22% loss from the closing price on Friday of $86.81 per barrel. The American benchmark West Texas Intermediate (WTI) traded at the same time at $82.17 per barrel, down 1.22% from the session close of $83.19 per barrel on Friday.
Both benchmarks started the week with significant losses but remained at multi-month highs. The rising value of the US dollar as well as emerging bearish data from China, the world’s largest crude oil importing country, were important reasons driving the price declines.
The US dollar index, which measures the value of the American dollar against a basket of currencies, including the Japanese yen, British pound, Canadian dollar, Swedish krona, and Swiss franc, increased 0.10% to 102.79, the highest level of the past 30 days.
Investors are still betting on China’s weak industrial data, which reflects the fragility of the country’s economic recovery. The top global importer of crude oil, iron, steel, copper, and coal saw declines in these imports during the first seven months of the year.
Furthermore, higher-than-expected annual consumer inflation in the US, the world’s largest oil consumer, keeps oil prices under pressure by raising inflationary concerns as well as the prospect of another interest rate hike.
According to experts, the July producer inflation report, which revealed that the US Federal Reserve (Fed) is not yet ready to declare triumph in its fight against inflation, also laid the groundwork for the Fed to make a new interest rate hike decision.
Investors are now anticipating the release of the Fed’s formal comments and minutes from its June 13–14 Federal Open Market Committee meeting, which will be made public on Wednesday. #Oil Prices Decline as Strong US Dollar Drags Demand