Oil: Oil Extends Losses on Higher Dollar and US Inventory Building
Brent crude futures fell 97 cents, or 0.9%, to $105.67 a barrel, while US West Texas Intermediate futures fell 98 cents, or 1.0%, at $100.98 a barrel at 0029 GMT. Brent fell 0.8% on Tuesday and WTI lost 1.3%.
“The rising dollar, a rise in U.S. crude inventories and concerns about weaker demand in China due to Shanghai’s continued lockdown added to the pressure,” said Hiroyuki Kikukawa, managing director of research at Nissan Securities. .
“Oil prices are likely to remain around $100 a barrel for some time amid demand concerns and the expectation of no conflict in the Middle East during the Muslim fasting month of Ramadan, but could rise. again after Ramadan and at the start of the US driving season,” he said.
The U.S. dollar hit its highest level in nearly two years on Tuesday, boosted by hawkish comments from Federal Reserve officials that pushed for a rapid reduction in the central bank’s bloated balance sheet. A stronger dollar makes oil more expensive for holders of other currencies.
U.S. crude and distillate inventories rose last week while gasoline inventories fell, market sources said, citing figures from the American Petroleum Institute on Tuesday. [API/S]
Crude inventories rose 1.1 million barrels for the week ended April 1, as analysts expected a decline of 2.1 million barrels.
Concerns about demand also grew after authorities in major oil importer China extended a lockdown in Shanghai to cover all of the financial hub’s 26 million people.
Still, losses were limited as the possibility of further sanctions over alleged war crimes committed by Russian troops in Ukraine raised concerns about supply disruptions.
Ukrainian President Volodomyr Zelenskiy told the United Nations Security Council on Tuesday that Russia must be held accountable for what he and many Western leaders have called war crimes, as the United States and its allies prepare to extend the penalties.
Britain on Tuesday urged G7 and NATO countries to ban Russian ships from their ports, agree a timetable for phasing out oil and gas imports from Russia and further tighten sanctions against banks and key industries.
Meanwhile, member states of the International Energy Agency (IEA) were still discussing how much oil they would together release from storage to cool markets, three sources told Reuters, adding that an announcement was expected in the next few days.