Join +750K new investors every month who copy stock picks from billionaire's portfoliosSign Up Free

Oil prices extend losing streak on dollar strength, demand concerns

Published 23/05/2024, 11:28 am
© Reuters.
- Oil prices settled lower for the fourth-straight day Thursday, pressured by a rising dollar amid concerns over high for longer U.S. interest rates as well as crude demand concerns amid unexpected build in U.S. inventories.

At 14:30 ET (19:30 GMT), Brent oil futures fell 0.7% to $81.36 a barrel, while West Texas Intermediate crude futures fell 0.9% to $76.87 a barrel. 

Dollar rises as US rate jitters grow following strong data 

The dollar climbed to put the squeeze on oil prices after data pointing to ongoing economic strength fueling a pick up inflation.  

 S&P Global Flash US PMI Composite Output Index rose sharply from 51.3 in April to 54.4 in May, with the report also highlighting that "the rate of inflation accelerating to register the second-largest monthly increase seen over the past eight months."

Initial jobless claims fell more than expected underscoring the strength in the labor market and further diminishing hopes for sooner rate cuts.

US inventories see unexpected build 

Fears of sluggish demand and well-supplied markets were furthered by official data on Wednesday showing that U.S. oil inventories saw an unexpected build in the week to May 17. 

Distillate inventories also grew, while gasoline inventories saw a smaller-than-expected draw. 

The reading set a dour tone ahead of the Memorial Day holiday weekend, which usually marks the beginning of the travel-heavy summer season, which is expected to boost demand. 

OPEC+ meeting in spotlight 

On the supply front, markets were awaiting a meeting of the Organization of Petroleum Exporting Countries and allies (OPEC+) in early-June, where the cartel could potentially extend its current run of production cuts.

"The weakness in oil prices increases the likelihood that OPEC+ members fully roll over their additional voluntary supply cuts into the second half of the year," ING said, in a note.

OPEC+ oil producers are making voluntary output cuts totalling about 2.2 million barrels per day for the first half of 2024, led by Saudi Arabia rolling over an earlier voluntary cut.

These curbs come on top of earlier reductions announced in various steps since late 2022 and bring the total pledged cuts to about 5.86 million barrels per day, equal to just under 6% of daily world demand.

(Peter Nurse, Ambar Warrick contributed to this article.)

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.