Crude oil prices fell today, Thursday, while the US dollar rose after the Federal Reserve hinted that it may raise interest rates faster than expected; But losses were limited thanks to a significant drop in US crude stocks.
Brent crude futures fell 42 cents, or 0.6%, to $73.97 a barrel by 06:49 GMT, after hitting their highest levels since April 2019 in the previous session. Read also Le Monde: This is how the US dollar revealed the weakness of the United States Can global trade be freed from the control of the US dollar? China is testing the digital yuan, does it pose a threat to the hegemony of the US dollar? The US dollar reaches a 4-month peak.. What about oil?
US crude futures fell 42 cents, or 0.6%, to $71.73 a barrel, after hitting their highest levels since October 2018 on Wednesday.
“Energy markets have become so revolved around a strong summer travel season and Iran nuclear deal talks that they have been shocked by the Fed’s tightening bias,” said Edward Moya, senior market analyst at OANDA.
Yesterday, Wednesday, the Fed decided to keep the key interest rates on the federal funds within the range of zero-0.25%, unchanged since March 2020; But he expected a rapid increase in interest rates by 2023.
The statements pushed the dollar index to rise at the end of the session yesterday, Wednesday, and the morning trading on Thursday, which increased the cost of buying crude to importers. The US dollar recorded the strongest daily gain in 15 months after the US Federal Reserve’s comments.
The rise of the US dollar increases the cost of oil priced in the US currency to holders of other currencies, which may put pressure on demand.
But oil price losses were limited, as data from the US Energy Information Administration showed that crude oil stocks in the world’s largest consumer fell sharply last week, as refineries boosted operations to their highest levels since January 2020; This indicates continued improvement in demand.
Prices also received support, as refinery consumption of crude in China, the second largest oil consumer in the world, increased 4.4% in May compared to the same month a year ago, reaching a record high.