Oil prices fall amid pressure from strong dollar
2024.06.23 21:54
Investing.com– Oil prices fell in Asian trade on Monday, remaining under pressure from a stronger dollar as traders awaited more cues on U.S. inflation and interest rates this week.
Crude markets were also subject to some profit-taking after a strong run over the past two weeks. They had added 3% in the prior week.
expiring in August fell 0.4% to $84.88 a barrel, while fell 0.4% to $80.41 a barrel by 21:21 ET (01:21 GMT).
Strong dollar weighs on oil amid inflation watch
The rose 0.1% on Monday, extending gains from the prior week as traders priced out bets on early interest rate cuts by the Fed. The greenback was close to a two-month high against a basket of currencies.
Strength in the dollar weighs on the prices of commodities that are priced in the greenback. A stronger dollar also dents international oil demand by making crude more expensive for foreign buyers. The dollar was also supported by stronger-than-expected purchasing managers index data released on Friday.
Focus this week was squarely on key data, which is the Federal Reserve’s preferred inflation gauge. The reading is due this Friday and is expected to show inflation remaining well above the Fed’s 2% annual target, giving the central bank more headroom to keep rates high.
Oil prices mark two weeks of gains
Oil prices were sitting on two weeks of strong gains, driven by a mix of encouraging demand signals and as worsening geopolitical conditions saw traders begin pricing in a risk premium.
U.S. data showing unexpected draws in oil inventories and improved gasoline demand factored into a more positive outlook for crude.
Growing risk of an all-out war between Israel and Hezbollah, as an extension of the conflict with Hamas, factored into expectations of supply disruptions in the Middle East.
Continued clashes between Russia and Ukraine, with Kyiv targeting major Russian refineries, also spurred concerns over supply disruptions.
