Global oil prices dip as strong US dollar, demand concerns weigh on market

WEB DESK: Global oil prices dipped as a strengthening US dollar and concerns about slowing demand weighed on the market. Brent crude was down 0.4pc, trading around $72 a barrel, while West Texas Intermediate (WTI) fell 0.5pc to $68.08 per barrel.

The US dollar hit its highest level in two years, following Donald Trump’s election victory, according to Bloomberg.

This surge made dollar-priced commodities like crude oil more expensive for buyers using other currencies, causing prices to drop. Other commodities such as copper also saw declines.

China’s shrinking role in the global oil market continues to be a concern. The US Energy Information Administration recently noted that India has overtaken China as the leading source of demand growth in Asia.

This shift is largely due to China’s economic slowdown and the increasing adoption of electric vehicles.

Traders are keeping an eye on several factors affecting the oil market, including OPEC+ supply decisions, US monetary policy, and the risks to global demand, especially from China. Crude prices have fluctuated between gains and losses since mid-October as these issues are weighed.

There are growing fears that the market could shift to oversupply next year. Morgan Stanley has already cut its price forecasts, citing a weaker outlook.

“Despite rising expectations of Fed rate cuts, the strong US economy continues to keep the dollar strong, which puts pressure on oil prices,” said Charu Chanana, chief investment strategist at Saxo Capital Markets in Singapore.

She added that OPEC’s recent downward revision of its growth forecast is fuelling demand concerns, especially with uncertainty over what Trump’s presidency could mean for China’s economic outlook.

The Middle East also drew attention, with Israel reportedly working on a cease-fire agreement with Lebanon as the region braces for Trump’s potential return to the White House, according to a Washington Post report.

In the US, crude inventories dropped by 800,000 barrels last week, according to the American Petroleum Institute. At the Cushing, Oklahoma, storage hub, stockpiles shrank by 1.9 million barrels, Bloomberg reported. Further analysis from the International Energy Agency is expected later today.

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