Weak economic data from China offsets progress on US debt ceiling legislation
Oil prices fell today, Wednesday, affected by the strength of the dollar, as well as weak data from China, the largest importer of crude in the world, which raised concerns about demand.
Brent crude futures for August delivery fell $1.29, or 1.75%, to $72.42 a barrel by 10:13 GMT, while US West Texas Intermediate crude fell $1.28, or 1.84%, to $68.18 a barrel. Both fell by more than 4% on Tuesday.
Brent crude contracts for the month of July, which expire today, Wednesday, as well as US crude, are heading to record monthly losses of more than 9% and 1%, respectively.
Chinese manufacturing activity contracted in May faster than expected due to falling demand, with the official manufacturing purchasing managers’ index falling to 48.8 from 49.2 in April. The index missed expectations to rise to 49.4.
The drop in oil prices was also pressured by the dollar’s rise to a two-month high, which increases the cost for buyers holding other currencies and hurts oil demand.
The dollar index, which measures the performance of the US currency against six other major currencies, rose, supported by improved inflation in Europe and progress on the US debt ceiling agreement, which will be presented to the House of Representatives today, Wednesday, for discussion.
The dollar could extend its gains if the expected US non-farm payroll data for the month of May on Friday came out better than expected and boosted the possibility of the Federal Reserve (the US central bank) raising interest rates again in June.
Dealers are also awaiting the meeting of the “OPEC +” alliance, which includes the Organization of the Petroleum Exporting Countries “OPEC” and allies, including Russia, on the fourth of June.
2023-05-31 12:10:09
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