Oil prices drop amid demand concerns and strong dollar
Thursday saw a decline in oil prices, driven by growing concerns over demand and the strengthening of the US dollar, making dollar-indexed oil more expensive for investors.
As of 0709 GMT, Brent crude, the international benchmark, was trading at $79.69 per barrel, a slight decrease of 0.01% from Wednesday's closing price of $79.70. Meanwhile, the American benchmark, West Texas Intermediate (WTI), fell 0.04% to $74.19 per barrel, compared to Wednesday's close of $74.22.
Recent attacks by Yemen's Houthi rebels, raising concerns about disruptions in the Red Sea and Suez Canal, have maintained upward pressure on both benchmarks. This situation has led carriers to reroute, avoiding these key transit points.
However, the latest industrial data from the US, the world's largest consumer of crude oil, indicates a drop in demand, contributing to the downward price trend. Wednesday's report from the Energy Information Administration showed that US commercial crude oil inventories rose by approximately 2.9 million barrels to 443.7 million barrels. This increase surpassed the American Petroleum Institute's projection of a rise of about 939,000 barrels.
Additionally, gasoline inventories in the US also saw an increase of around 2.7 million barrels during the same period.
The strengthening US dollar, influenced by international currency trends and anticipation of the Federal Reserve’s Personal Consumption Expenditures (PCE) price index report, has added pressure on dollar-indexed oil prices. This report, a key measure of inflation for the Fed, could significantly impact the dollar's trajectory, particularly as the Federal Reserve counters the idea of rapid rate cuts next year.