Prices slip amid concern that recent economic data from the US and China indicates that demand is not likely to improve
20 April 2023 - 08:03
byAndrew Hayley and Katya Golubkova
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Beijing/Tokyo — Oil prices fell in Asian morning trade on Thursday as the dollar strengthened on rate-hike expectations and after recent economic data from the US and China did not do enough to encourage expectations that demand will improve.
Brent crude futures lost 80c or 0.96% to trade at $82.32 a barrel. West Texas Intermediate crude (WTI) futures dropped 69c or 0.87% to $78.47 at 3.02am GMT.
Both benchmarks, declining for a second day after a 2% fall on Wednesday, are at their lowest since Opec+ announced its surprise production cut on April 2.
“WTI crude is back below the $80 level and it could continue drifting lower if the strong dollar trade resumes,” Edward Moya, senior market analyst at Oanda, said in a client note.
The US dollar index has moved up about 0.40% over the course of this week. A strengthening greenback makes oil more expensive for holders of other currencies.
“The strong US dollar weighed on oil markets this week as odds for the Fed to continue rate hikes strengthened as bond yields started climbing again,” Tina Teng, an analyst at CMC Markets in Auckland, said in an email.
“Though China reported better-than-expected GDP data, both industrial production and fixed asset investments fell short of consensus data, which did not help [in] boosting oil prices,” she said.
US economic activity was little changed in recent weeks, with employment growth moderating slightly and price increases appearing to slow, according to a Federal Reserve report published on Wednesday.
“This unsettled markets, magnifying recent concerns that monetary tightening has weakened demand for oil ... the market shrugged off a relatively bullish EIA inventory report,” ANZ Research said in a client note.
US crude stockpiles fell by 4.6-million barrels last week as refinery runs and exports rose, while petrol inventories jumped unexpectedly on disappointing demand, according to the US Energy Information Administration (EIA).
The crude stockpile decline was far steeper than analysts’ estimate of 1.1-million barrels, and the American Petroleum Institute’s estimates late on Tuesday of 2.7-million barrels.
On the supply side, oil loading from Russia’s western ports in April is likely to rise to the highest since 2019, above 2.4-million barrels a day, despite Moscow’s pledge to cut output, trading and shipping sources said.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Oil falls amid worry about demand
Prices slip amid concern that recent economic data from the US and China indicates that demand is not likely to improve
Beijing/Tokyo — Oil prices fell in Asian morning trade on Thursday as the dollar strengthened on rate-hike expectations and after recent economic data from the US and China did not do enough to encourage expectations that demand will improve.
Brent crude futures lost 80c or 0.96% to trade at $82.32 a barrel. West Texas Intermediate crude (WTI) futures dropped 69c or 0.87% to $78.47 at 3.02am GMT.
Both benchmarks, declining for a second day after a 2% fall on Wednesday, are at their lowest since Opec+ announced its surprise production cut on April 2.
“WTI crude is back below the $80 level and it could continue drifting lower if the strong dollar trade resumes,” Edward Moya, senior market analyst at Oanda, said in a client note.
The US dollar index has moved up about 0.40% over the course of this week. A strengthening greenback makes oil more expensive for holders of other currencies.
“The strong US dollar weighed on oil markets this week as odds for the Fed to continue rate hikes strengthened as bond yields started climbing again,” Tina Teng, an analyst at CMC Markets in Auckland, said in an email.
“Though China reported better-than-expected GDP data, both industrial production and fixed asset investments fell short of consensus data, which did not help [in] boosting oil prices,” she said.
US economic activity was little changed in recent weeks, with employment growth moderating slightly and price increases appearing to slow, according to a Federal Reserve report published on Wednesday.
“This unsettled markets, magnifying recent concerns that monetary tightening has weakened demand for oil ... the market shrugged off a relatively bullish EIA inventory report,” ANZ Research said in a client note.
US crude stockpiles fell by 4.6-million barrels last week as refinery runs and exports rose, while petrol inventories jumped unexpectedly on disappointing demand, according to the US Energy Information Administration (EIA).
The crude stockpile decline was far steeper than analysts’ estimate of 1.1-million barrels, and the American Petroleum Institute’s estimates late on Tuesday of 2.7-million barrels.
On the supply side, oil loading from Russia’s western ports in April is likely to rise to the highest since 2019, above 2.4-million barrels a day, despite Moscow’s pledge to cut output, trading and shipping sources said.
Reuters
Asian shares slip in cautious trade
Gold loses ground as focus turns to central banks’ rate moves
Oil slumps as US rate hike fears outweigh China data
Global markets slip as inflation worries investors
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Most Read
Related Articles
WATCH: Market Report
MARKET WRAP: JSE slides, rand firms on hot CPI
JSE slips as investors consider mixed US corporate earnings
Published by Arena Holdings and distributed with the Financial Mail on the last Thursday of every month except December and January.