Oil prices dipped on Thursday as the dollar firmed, while the possibility of further increases to interest rates by global central banks also heightened demand concerns.
Brent crude futures fell 69 cents, or 0.8%, to US$82.01 a barrel by 0925 GMT and U.S. crude futures lost 79 cents, or 1%, to US$76.49.
Both contracts fell as the dollar gained. A stronger dollar can weaken oil demand because it makes the commodity more expensive for those holding other currencies.
Federal Reserve Chair Jerome Powell on Wednesday said that the U.S. central bank will raise interest rates further next year, even as the economy slips towards a possible recession.
“The oil price is under pressure today as the Fed’s hawkish guidance for its monetary policy sparked renewed concerns about economic growth, lifting the U.S. dollar and sending commodity prices down,” said CMC Markets analyst Tina Teng.
Chinese economic data for November was “much lower than expected, further darkening the demand outlook”, Teng added.
The world’s second-biggest economy lost more momentum as factory output slowed and retail sales extended declines, both missing forecasts and clocking their worst readings in six months as COVID-19 cases surged.
Also weighing on oil prices, Canada’s TC Energy Corp said it is resuming operations in a section of its Keystone pipeline, a week after a leak of more than 14,000 barrels of oil in rural Kansas triggered the whole pipe’s shutdown.
Price declines were capped by projections from the International Energy Agency, which expects Chinese oil demand to recover next year after a contraction this year of 400,000 barrels per day.
Meanwhile, U.S. crude oil stockpiles rose by more than 10 million barrels last week, the most since March 2021, the Energy Information Administration said.
Goldman Sachs on Wednesday reduced its oil price forecasts for 2023, citing a projected market surplus early next year as supply from Russia remains robust and China demand ramps up.