Oil prices fell by more than $1 a barrel on Tuesday after five days of gains, as comments from US Federal Reserve Chair Jerome Powell stoked rate hike fears, the dollar strengthened and top crude importer China issued weak data.
Brent crude futures shed $1.46, or 1.7%, to $84.72 a barrel by 1606 GMT. US West Texas Intermediate crude dropped by $1.63 a barrel, or 2%, at $78.83.
Prices declined after Powell told Congress the Fed would likely need to increase rates more than expected in light of recent strong economic data.
The remarks pushed up the US dollar, which rose 0.70% on the day at 104.97.
A stronger dollar typically reduces demand for dollar-denominated oil from buyers paying with other currencies.
Further pressure came from a contraction in China’s exports and imports in January and February, including crude oil imports, despite a lifting of Covid-19 restrictions.
“Given high inflation in the US and Europe, demand should keep weakening,” said Iris Pang, ING’s Chief Economist for Greater China.
Published in The Express Tribune, March 8th, 2023.
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