Oil prices dip as dollar firms, Chinese data deluge in focus
2023.04.16 21:24
© Reuters.
By Ambar Warrick
Investing.com– Oil prices fell slightly in early Asian trade on Monday as hawkish comments from Federal Reserve officials on rising interest rates pushed up the dollar, with focus now turning to a raft of Chinese economic readings this week for more cues on a recovery in demand.
A reading on China’s is due on Tuesday, and is expected to show that growth bounced back after the lifting of anti-COVID restrictions earlier this year. Separate readings on and are also due this week, as is a by the People’s Bank.
This week’s data is expected to largely factor into expectations that a recovery in China will drive oil demand to record highs this year- a notion that was reiterated by the International Energy Agency (IEA) on Friday.
But calls from Fed Governor Christopher Waller for more rate hikes somewhat offset this positive forecast, as the strengthened and as markets second-guessed expectations for an imminent pause in interest rate hikes.
fell 0.4% to $86.25 a barrel, while fell 0.1% to $82.36 a barrel by 21:15 ET (01:15 GMT).
Oil prices recovered sharply from 15-month lows after the Organization of Petroleum Exporting Countries and allies (OPEC+) announced an unexpected production cut earlier this month. Signs of tighter U.S. inventories and disruptions in supply from Iraqi Kurdistan also aided this rebound.
But the rally appears to have run out of steam in recent sessions, amid increased concerns over slowing economic growth in the U.S. and other major economies, which could offset a recovery in Chinese demand.
Rising interest rates are also expected to further stymie economic growth this year, especially if the Federal Reserve maintains its hawkish stance.
The OPEC had warned of such a scenario in its monthly report released last week, which had in part fueled its recent production cut.
The dollar advanced against a basket of currencies on Monday, sustaining a recovery from last week following Waller’s comments. Strength in the greenback is bearish for commodities priced in the currency.
While the IEA forecast stronger global demand this year, it also warned that the recent supply cut by the OPEC could hurt consumers with higher prices, especially amid deteriorating economic conditions.
