Oil prices steadied after hitting their lowest level this month, as a stronger US dollar pressured commodities and concerns about demand growth clouded the price outlook.
Brent crude, the global benchmark, was trading near $72 a barrel, while West Texas Intermediate crude was above $68. The U.S. dollar hit a two-year high after Donald Trump’s election victory, making dollar-priced raw materials more expensive for most buyers.
China’s position in the global oil market has weakened this week, with the U.S. Energy Information Administration saying India is now the main source of demand growth in Asia, as Chinese consumption slows due to an economic slowdown and the rise of electric vehicles. More market analysis is expected on Thursday from the International Energy Agency.
Since mid-October, oil prices have been swinging between weekly gains and losses as traders read into the impact of OPEC+ supply moves, U.S. monetary policy and risks to oil demand growth, particularly in China. There is also widespread concern that the global market will be in surplus next year, prompting Morgan Stanley to cut its price forecasts this week, citing a downward revision in its outlook.
“Even as expectations of a Fed rate cut increase, the resilience of the US economy is keeping the dollar strong, weighing on oil prices,” said Sharwa Chanana, chief investment strategist at Saxo Capital Markets in Singapore. “Demand concerns persist after OPEC cut its growth forecasts and as traders digest the impact of the upcoming Trump presidency on China’s outlook.”
In the United States, the American Petroleum Institute reported that U.S. crude oil inventories fell by 800,000 barrels last week, while inventories at the Cushing, Oklahoma, hub fell by 1.9 million barrels, according to a document seen by Bloomberg.
The Middle East was also in focus, with the Washington Post reporting that Israel was rapidly preparing for a ceasefire with Lebanon as the government adjusts to the possibility of Trump returning to the White House.
