Oil Prices Decline by 3% as U.S Dollar Strenghtens
Crude oil extended its fall as broader market concerns have weighed on the complex, while a stronger dollar has also added further pressure. The above-normal inventory draw keeps pushing US natural gas higher, and China’s unsettled demand outlook plunged crude oil price lower.
The US . Fed rate cut led to another dollar rally. In a note, ING analysts said they see the ratlly extending into the New Year. Oil prices steadily dropped in the third week of December due to weak demand expectations in spite of Middle East concerns.
Brent settled at $71.71 per barrel late on Friday, down by around 3.2% relative to the closing price of $74.06 a barrel last week. US West Texas Intermediate ended the week at $68.46 a barrel, a decline of about 3.08% from last Friday’s session, which closed at $70.64 per barrel.
Oil prices declined following the Federal Reserve’s announcement during this week’s meeting, signalling a more gradual and cautious approach to future interest rate cuts. ‘The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee’s goals,’ the bank said in a statement on Wednesday.
‘The Committee’s assessments will take into account a wide range of information, including readings on labour market conditions, inflation pressures and inflation expectations, and financial and international developments,’ it added.
On Wednesday, the Fed had cut the benchmark policy rate by 25 basis points to the range of 4.25%-4.50%, as widely expected. Meanwhile, the expectation that the Fed may slow the pace of policy rate cuts has boosted dollar demand.
Predictions that the tax cuts, immigration restrictions, and import tariffs promised by Donald Trump, who will take office in January, will drive inflation in the US also contribute to the rise of the dollar.
The US dollar index reached its highest level in 2 years at 108.880 on Friday. The strong dollar is expected to reduce demand by making oil more expensive for foreign currency users. Also, concerns about a possible slowdown in fuel demand in 2025 especially in China, the world’s largest oil importer, continue to put pressure on prices.
Chinese top refiner Sinopec said in its annual energy outlook on Thursday that it forecasts China’s crude oil imports could peak by 2025, with the country’s overall oil consumption reaching its peak by 2027 due to weakening demand for diesel and gasoline. #Oil Prices Decline by 3% as U.S Dollar Strengthens FG Partners NACCIMA for Business Growth, Economic Reforms
