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24/06/24
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USD’s Strength Weighs on Oil Markets
On June 24, oil prices turned downward as markets remained concerned about the Fed’s higher-for-longer interest rate stance, thereby lifting the USD and counterbalancing support provided by geopolitical tensions and OPEC+ supply cuts to oil markets.
As of 3.17 p.m. (GMT), Brent crude futures rose by 0.68 percent to $84.9 per barrel after a decline from levels above $85, while U.S. West Texas Intermediate crude futures rose by 0.73 percent to $81.32 per barrel.
According to some analysts, the strong USD hovering around its highest level since the early days of last month was due to the stronger than expected PMI data last Friday, with contributions from political concerns related to the upcoming French election. USD-denominated commodities become less attractive for those holding other currencies whenever the USD gains strength.
Brent crude futures and U.S. West Texas Intermediate crude futures recorded about 3 percent gains last week as there were signs of stronger demand for oil products in the United States and supply was kept in check by OPEC+ cuts.
There was a decline in crude inventories in the U.S. and demand for gasoline increased for the seventh consecutive week. Oil prices are also being influenced by the Gaza crisis and attacks on refineries in Russia.
On June 21, Petroecuador in Ecuador declared force majeure regarding deliveries of Napo heavy crude for exports after a major pipeline and oil wells were shut down due to heavy rains. On the same day, Baker Hughes’ report revealed a decline in the number of operating oil rigs in the United States to 485 last week, representing the lowest since January 2022.
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