Oil prices continued to fall on the 22nd, due to market expectations that the Federal Reserve (the US central bank) will continue to raise interest rates, which has raised concerns about an economic recession and a drop in demand for crude oil.
Brent crude futures for April delivery fell 23 cents to $82.82 a barrel as of 04:20 GMT on the 22nd, after falling 1.2% in the previous session.
West Texas Intermediate crude futures for April delivery also fell 21 cents to $76.15 a barrel.
West Texas Intermediate crude futures for March delivery were down 18 cents at the close yesterday.
The Federal Reserve is due to release the minutes of its last meeting today, which will give traders a glimpse into what senior officials expect to see in interest rates after recent data showed a strong labor market and higher-than-expected consumer prices.
The dollar tends to rise when interest rates rise, making dollar-denominated oil more expensive for holders of other currencies. But other economic reports from the United States, the world’s largest oil consumer, showed some worrying signs.
Inventory sales fell to the lowest level since October 2010 in January.
“Rising recession fears have capped oil prices, but the market is cautiously optimistic about a recovery in Chinese demand, especially for gasoline and jet fuel,” said the Asia-Pacific head of the analyst firm.
strong dollar
The dollar and sterling found support today after a sudden revival in U.S. and U.K. business activity raised the prospect of further interest rate hikes by both central banks.
The euro pared some of the losses recorded in the previous session, although the euro zone’s purchasing managers’ index rose to a nine-month high of 52.3 points in February, supported by unexpectedly strong growth in the services sector.
Data released yesterday showed that U.S. business activity unexpectedly rebounded in February, hitting its highest level in eight months and breaking the 50-point line that separates growth from contraction for the first time since July last year.
The greenback rose in today’s session, while the pound hit $1.21015 in its latest session, retaining most of yesterday’s gains – up 0.6%.
The dollar index hit 104.15 after rising 0.3% yesterday. The euro was up 0.05% at $1.0652 against the dollar, after falling 0.36% in the previous session.
“Given the general sentiment that the ECB still needs to do more is weighing on its growth outlook, I think the euro remains in a very difficult position,” said NAB senior analyst and FX strategist.
other currencies
- The New Zealand dollar was up 0.1% at $0.62195 in latest trade, after rising to an intraday high of $0.6248 after the central bank raised interest rates.
- One Australian dollar was down 0.31% at $0.6835.
- The dollar rose to a two-month high of 135.23 yen against the yen in the previous session, before easing slightly to 134.91 yen.
