NEW YORK (Reuters) –
Oil prices went down in Asia on Thursday as the dollar got stronger and the possibility of more interest rate hikes by central banks around the world made people worry about demand.
By 04:30 GMT, Brent crude futures had dropped 64 cents, or 0.8%, to $82.06 per barrel, while US crude futures had dropped 74 cents, or 1.0%, to $76.54.
As the dollar went up, both contracts went down.
When the dollar gets stronger, it makes oil less popular because it costs more in other currencies.
Jerome Powell, the head of the Federal Reserve, said on Wednesday that the US central bank will raise interest rates even more next year, even though the economy is getting closer to a recession.
An analyst at CMC Markets, Tina Teng, said, “The price of oil is under pressure today because the Fed’s hawkish guidance for its monetary policy has brought back worries about economic growth, which has lifted the US dollar and sent commodity prices down.”
Teng said that the Chinese economic data for November were “much lower than expected,” which made the outlook for demand even worse.
The world’s second-largest economy lost even more steam as factory output slowed and retail sales kept falling. Both were worse than expected and hit their lowest numbers in six months as COVID-19 cases rose.
Also hurting 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 shut down the whole pipe.
The International Energy Agency predicts that China’s oil demand will rise again next year after dropping by 400,000 barrels per day this year. This kept prices from going down even more.
The Energy Information Administration (EIA) said that US crude oil stocks grew by more than 10 million barrels last week, which was the most since March 2021.
The US now has 223.6 million barrels of gasoline and 120.2 million barrels of distillate. In the past week, gasoline stocks went up by 4.5 million barrels and distillate stocks went up by 1.4 million barrels.
In a note, Citi analysts said, “Refineries cut back on their runs, which led to a rise in commercial crude oil stocks.”
The analysts also wrote that net exports of refined products went up, even though demand from end users is still going down because of high energy prices.