Last Update: May 19, 2023, 01:59 AM IST
Strong US economic data for April as well as optimism about debt ceiling talks have strengthened expectations of further upside in the market. (Image: Reuters file)
Brent futures fell $1.10, or 1.4%, to $75.86 a barrel. US West Texas Intermediate (WTI) crude fell 97 cents, or 1.3%, to $71.86
Oil prices fell nearly 1% on Thursday after the dollar hit a two-month high on solid US economic data on expectations the US Federal Reserve would hike interest rates again in June.
Brent futures fell $1.10, or 1.4%, to $75.86 a barrel. US West Texas Intermediate (WTI) crude fell 97 cents, or 1.3%, to $71.86.
The US dollar rose to its highest since March 17 against a basket of currencies on data dampening optimism about promising early jobless claims and a possible debt ceiling deal.
A stronger dollar can reduce demand for oil by making the fuel more expensive for holders of other currencies.
US inflation does not seem to be cooling fast enough to allow the Federal Reserve to halt its interest-rate hike campaign, according to two Fed policymakers.
With comments from Dallas Federal Reserve Bank President Laurie Logan and St. Louis Fed President James Bullard, it appeared that a minority accomplice stance at the Fed has gained ground at the next policy meeting on June 13-14.
Higher interest rates push up the cost of borrowing, which can slow the economy and reduce demand for oil.
“What is now good news for the economy is bad news for the crude demand outlook as economic resilience will force the Fed to kickstart the economy,” said Edward Moya, senior market analyst at data and analytics firm OANDA.
ANZ Research said in a note on Thursday that optimism about debt ceiling talks, in addition to the strength of April US economic data, had further strengthened market expectations.
President Joe Biden and top US congressional Republican Kevin McCarthy on Wednesday underlined their determination to reach an agreement on raising the federal government’s $31.4 trillion debt limit. The government may run out of money to pay its bills on June 1.
US Vice President Kamala Harris and Biden’s top economic advisor Lyle Brainard said the debt default would push the economy into recession.
Meanwhile, European Central Bank (ECB) Vice President Luis de Guindos said that the ECB will have to raise interest rates further to bring inflation back to its medium-term target of 2%, although most of the tightening has already been done.
Also oil prices, weighing on blue-chip stocks in China, the world’s biggest oil importer, slipped after forecasts for growth in the country’s industrial production and retail sales showed the pace of economic recovery was slowing.
Another factor that could reduce oil demand was a fire at the Salina Cruz refinery in Mexico, owned by the Mexican state oil company Pemex. According to the local Red Cross, the workers were evacuated, no one was injured and the fire is under control.
On the supply side, Saudi Arabia’s crude exports rose nearly 1% to 7.52 million barrels per day (bpd) in March from the previous month, according to data from the Joint Organization Data Initiative (JODI).
Kpler and Petro Logistics, which also monitors shipments, have said Saudi exports could fall in May as the kingdom and other Organization of the Petroleum Exporting Countries (OPEC) and their allies, a grouping known as OPEC+ May voluntarily cut production. , catches up.
(This story has not been edited by News18 staff and is published from a syndicated news agency feed – reuters,
