© Reuters.
Investing.com – Oil prices fell in Asian trading on Tuesday amid a negative recovery in the dollar, while weaker-than-expected trade data from China also raised concerns about sluggish demand from the world’s largest oil importer.
Crude oil prices rose slightly from multi-month lows on Monday, helped by pledges from Saudi Arabia and Russia to maintain ongoing supply cuts through the end of the year.
The US also announced plans to buy another 3 million barrels of oil to replenish the Strategic Petroleum Reserve, signaling a worsening global supply shortage.
But this has been largely offset by a recovery in the dollar, while traders also continue to factor in a lower risk premium associated with the war between Israel and Hamas. Uncertainty over oil demand is also weighing on pressure, especially ahead of China’s key oil import figures.
Weak economic data from the eurozone and the UK have also raised concerns that slowing economic growth will weigh on oil demand.
By 10:22 pm ET (0322 GMT), crude oil futures fell 0.4% to $84.83 a barrel and crude oil futures fell 0.4% to $80.52 a barrel.
Both contracts suffered huge losses last week amid rising bets that the war between Israel and Hamas will not disrupt supplies from the Middle East.
Data on Tuesday showed China’s oil exports fell more than expected in October, while the country’s trade surplus was at its worst level in 17 months.
But imports unexpectedly rose during the month, signaling some improvement in local demand as Beijing enacted additional stimulus measures.
However, prolonged export weakness signals new headwinds for China’s biggest economic engines, which in turn could dampen the country’s economic growth and reduce oil demand.
China’s fuel consumption remains largely sluggish this year, with export-oriented refineries accounting for most of the country’s crude oil demand. But the government recently introduced new limits on the capacity of fuel processing plants to reduce their carbon emissions.
This year also sees China gradually increasing its oil reserves at the expense of cheap Russian oil, which could lead to a reduction in the country’s imports in the coming months.
The dollar rose from a 6-week low as comments from some Federal Reserve officials overnight suggested market expectations of a pause in the US central bank’s rate hike cycle may be premature.
Minneapolis Fed Governor Neal warned that the central bank may not stop raising interest rates given that inflation has remained stubborn in recent months. While he acknowledged some resilience in the U.S. economy, he also noted that the Fed still has a lot of work to do regarding inflation.
Kashkari’s comments somewhat dampened expectations that the Fed has finished raising interest rates, hopes that have sparked a sharp rally in financial markets over the past four sessions.
His comments also sparked a rebound in the dollar, which in turn put pressure on oil prices. More Fed officials will speak later in the day.
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2023-11-07 07:49:00
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