Oil prices fall more than 1% as dollar strengthens
On Tuesday 31 January, oil prices dropped by more than 1%, reaching two-week lows as a result of the possibility of future interest rate increases, a strengthening dollar, and plentiful Russian crude supplies.
At 1133 GMT, March Brent crude futures were down $1.13, or 1.33%, to $83.77 a barrel after earlier in the session reaching their lowest level since January 13.
The more actively traded April contract decreased by $1.07, or 1.27%, to $83.43 as the March contract approaches its expiration on Tuesday.
Also falling to their lowest level since January 11, U.S. West Texas Intermediate (WTI) crude futures were $1.20, or 1.54%, lower at $76.70 per barrel.
“In the next days, central banks and the OPEC+ producer group will be in action. Decisions on interest rates will offer some light on the prospects for economic and oil demand growth “PVM oil dealer Tamas Varga said.
Investors expect the Federal Reserve of the United States to raise interest rates by 25 basis points on Wednesday, followed by half-point rises from the Bank of England and the European Central Bank the following day.
The US dollar rose slightly on Tuesday ahead of central bank announcements, making oil more expensive for foreign purchasers and perhaps weakening oil demand. Higher interest rates may also slow the global economy.
When the Organization of the Petroleum Exporting Countries (OPEC) meets on February 1 at 1100 GMT, a panel of members is anticipated to suggest maintaining the group’s current output guideline, OPEC+ representatives told Reuters on Monday.
Following the announcement that Russia’s oil loadings from its Ust-Luga port are anticipated to increase at the start of February, despite western sanctions imposed over its invasion of Ukraine, pessimistic sentiment increased.
Ole Hansen, head of commodity strategy at Saxo Bank, said that while supply is uncertain due to impending sanctions on Russian refined goods, the prognosis for oil demand appears positive as China’s economy improves.
According to a Reuters poll, 49 economists and experts anticipate Brent to average over $90 per barrel this year, the first increase since an October poll.
According to the National Bureau of Statistics, China’s official purchasing managers’ index (PMI), which gauges factory activity, increased in January from December (NBS).
Source: Energy Ghana