TOKYO – Oil prices experienced a decline for the third consecutive day due to the strengthening of the dollar, which was attributed to a recovery in the U.S. housing market. However, concerns still persist regarding whether monetary stimulus will be enough to revive growth in China.
Brent futures dropped by 0.3 percent, or 21 cents, to $75.69 per barrel, while U.S. West Texas Intermediate (WTI) crude futures fell by 0.2 percent, or 14 cents, to $71.06 at 0043 GMT.
The rise in the dollar can be attributed to the surge in U.S. homebuilding, which reached its highest level in more than a year, along with a climb in permits for future construction. This indicates a potential recovery in the housing market after being negatively impacted by Federal Reserve rate hikes.
New US home construction surges by most in 3 decades in May
A stronger dollar tends to reduce oil demand as it makes the commodity more expensive for buyers holding currencies other than the dollar.
The market remains concerned about China’s faltering recovery. China, as the world’s top oil importer, recently reduced its benchmark loan prime rates (LPR) for the first time in 10 months in an effort to boost growth. However, the 10-basis-point reduction in the five-year LPR was smaller than expected.
China’s economy slows in May, firming case for more support
The rate cut came after recent economic data showed that China’s retail and factory sectors were struggling to sustain their momentum from earlier this year.
“Investors remained impatient with China’s efforts to boost economic growth,” ANZ Research stated in a client note on Wednesday. “Beijing’s slow stimulus rollout is adding concerns about the weakening economy.”
Oil trade was also cautious ahead of the congressional testimony by U.S. Federal Reserve Chair Jerome Powell. It is expected that the testimony will provide clues on future rate moves in the world’s largest economy.
On Tuesday, two Federal Reserve policymakers and an economist nominated to join them on the Fed’s Washington-based board stated that their focus is on reducing high inflation levels so that the U.S. economy can achieve sustainable growth.
“We anticipate that Fed Chair Powell will deliver a hawkish semi-annual testimony to Congress reflecting the FOMC’s median projection for higher interest rates in the coming months and more resilient inflation in the near term,” ANZ Research stated in the note, referring to the central bank’s Federal Open Market Committee.
Traders are also keeping an eye out for U.S. oil inventory data from the American Petroleum Institute industry group, which will be released later on Wednesday, as well as the Energy Information Administration report on Thursday. Both reports were delayed by a day due to the Juneteenth public holiday on Monday.
Five analysts polled by Reuters estimated that crude stockpiles fell by an average of about 400,000 barrels in the week ending June 16.
Your subscription could not be saved. Please try again.
Denial of responsibility! SamacharCentrl is an automatic aggregator of Global media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, and all materials to their authors. For any complaint, please reach us at – [email protected]. We will take necessary action within 24 hours.
Omprakash Tiwary is a business writer who delves into the intricacies of the corporate world. With a focus on finance and economic landscape. He offers readers valuable insights into market trends, entrepreneurship, and economic developments.
Denial of responsibility! Samachar Central is an automatic aggregator of Global media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, and all materials to their authors. For any complaint, please reach us at – [email protected]. We will take necessary action within 24 hours.
