Crude oil prices fall as strengthening dollar prompts weak demand concern

Crude oil prices fall as strengthening dollar prompts weak demand concern

Oil prices fell on Thursday as muted U.S. economic data and expectations of interest rate hikes pushed up the U.S. dollar, prompting fear of a stronger dollar hurting global oil demand by making it more expensive.

Brent futures for June delivery were down by 37 cents, or 0.4%, at $82.76 a barrel. West Texas Intermediate crude (WTI) for May delivery lost 28 cents, or 0.35%, to trade at $78.88 at 0005 GMT.U.S. economic activity was little changed in recent weeks as employment growth moderated somewhat and price increases appeared to slow, showed a Federal Reserve report published on Wednesday.

U.S. crude stockpiles fell by 4.6 million barrels last week as refinery runs and exports rose, while gasoline inventories jumped unexpectedly on disappointing demand, according to the U.S. Energy Information Administration (EIA). The crude stockpile decline was far steeper than analysts’ estimate of 1.1 million barrels, and the American Petroleum Institute’s estimates late on Tuesday of 2.7 million barrels.

On the supply side, oil loading from Russia‘s western ports in April are likely to rise to the highest since 2019, above 2.4 million barrels per day, despite Moscow’s pledge to cut output, trading and shipping sources said. On Wednesday, oil prices slid about 2% to a two-week low despite the sharp decline in U.S. crude inventories, as the dollar strengthened on fear that looming Fed rate hikes could curb energy demand in the world’s biggest consumer.

“WTI crude is back below the $80 level and it could continue drifting lower if the strong dollar trade resumes,” Edward Moya, senior market analyst at OANDA, said in a client note.