Oil Prices Decline as Strong US Dollar Raises Energy Costs
Prices of crude oil decline over rising U.S dollar. The global commodity market trading bearish ahead of US Federal Reserve (Fed) Chairman Jerome Powell speech. The U.S Fed chair is scheduled to speak on the economic outlook after inflation surge triggered caution markets temperature. Strong dollar has raised energy costs for major importers –China, US and India amidst geopolitical tensions.
In the global commodities market, Brent crude fell to $71.67 per barrel on Thursday, November 14, 2024. Also, the US benchmark West Texas Intermediate (WTI) declined to $67.84 per barrel.
Inflation data from the US on Wednesday raised concerns that the Fed’s battle against inflation could take longer than expected, putting downward pressure on oil prices.
Key inflation indicators have raised questions about whether the Fed will proceed with a rate cut at its December meeting. A rise in inflation could prompt the central bank to pause its rate-cutting plans.
High interest rates are expected to strengthen the US dollar against other currencies, potentially curbing oil demand. Market participants are closely watching Powell’s statements for clues on the Fed’s next moves, with money market futures pricing in an 83% probability of a 25 basis point rate cut next month.
Meanwhile, data from the American Petroleum Institute (API) showed oil demand in United States would increase after over usage in the previous week. API reported a decrease of 777,000 barrels in US commercial crude inventories last week, contrary to market expectations of a 1 million barrel increase.
The US Energy Information Administration is set to release its official inventory report during the day. The U.S. dollar rises as investors continue to bet on higher inflation under president-elect Donald Trump, Swissquote Bank says in a note.
The dollar softened briefly after U.S. inflation data came in line with expectations. However, the greenback has since rebounded, as inflation is expected to accelerate on Trump’s proposed pro-growth policies and tariffs, according to Swissquote Bank analyst Ipek Ozkardeskaya.
The dollar is “clearly in the overbought market territory” and a minor correction is possible, while the currency’s outlook remains positive amid rising doubts over the Federal Reserve’s ability to keep cutting interest rates, she says. The DXY dollar index rises to 0.1% to 106.601 after hitting a one-year high of 106.775 earlier. ECOWAS, ECOBANK Unveil Empowerment Programme for Women Traders
