The dollar is at a multi-week high. Fears of hawkish Fed return over Friday economic data. The dollar hovers close to a seven-week high on Monday after a series of strong US economic data strengthened the view that the Federal Reserve will have to raise interest rates further and for longer.
Oil prices fell slightly İn volatile trade Monday as a stronger dollar and recession risks offset gains from Russia’s plans to deepen oil supply cuts.
A solid dollar makes commodities priced in US currency more expensive for those trading in other currencies.
West Texas Intermediate U.S. crude futures (WTI) traded at $76.09 a barrel, 23 cents, or 0.3% lower, while Brent crude futures were down 30 cents, or 0.36%, at 0411 GMT to $82.86.
Both benchmarks rose more than 90 cents on Friday.
Crude oil continues to be driven by sentiment in the broader financial markets.
The personal consumption expenditures (PCE) price index rose 0.6% last month after rising 0.2% in December, and a hawkish Fed fear came to the fore on Friday.
If the urge to risk aversion continues to increase, crude oil is likely to come under pressure again.
Adding to the downward pressure, US crude inventories rose to the highest level since May 2021 last week, according to data from the Energy Information Administration (EIA).
Increasing EIA supply and stock data is raising more skepticism about markets rather than providing clarity.
On the supply side, Russia plans to reduce oil exports from western ports in March, in addition to the production cut it has announced.
Oil prices have fallen by about one-sixth a year since February 24, 2022, when Russia marched into Ukraine.
The managing director of Polish refinery PKN Orlen said on Saturday that Russia has stopped oil supplies to Poland via the Druzhba pipeline, a day after Poland delivered the first Leopard tanks to Ukraine.
Two weeks after the invasion, prices soared to a record $128 per barrel, but later cooled amid fears of a global economic slowdown.
China is holding its annual parliamentary meeting this weekend, where new economic goals and policies will be showcased. The government is expected to reiterate its priority of promoting growth and call for more policy support.
Investors are gearing up to see China’s manufacturing surveys this week to set a clear direction for oil demand.