Oil Plunges Further As Dollar Gains Further Momentum

Oil Plunges Further As Dollar Gains Further Momentum

February 28, 2023 0 By Wiley McDermott

As returns on Monday, the U.S. Dollar straightaways gained momentum. The strong U.S. dollar pressurized crude oil prices and kept investors away from investing in the commodity.

The decline in crude oil price up to some extent being restricted by the Russian oil supply to Poland. The Russian supply can play a crucial role in addressing the supply shortfall.

By the end of today’s trading session, the price of the Brent futures market saw a slip of 34 cents in its price. This accounts for a 0.4% decline in Brent futures price. Currently, Brent crude is valued at $82.82 per barrel.

Conversely, the U.S. crude oil futures market (WTI) experienced a slump in its price by 0.5%. By the end of press time, WTI was being traded at $75.94.

Despite the fact that both crude oil benchmarks have seen a decline in their prices, the current price range is still 90% higher than their prices on Friday.

Dollar Goes Further High

As compared to crude oil USD is constantly rising above. By the end of today, the price of USD hit its seven consecutive high mark.

Over the past couple of weeks, the U.S. economy is continuously revolving around the uncertain economic futures and the Fed’s policy rate decision.

As the market once more was dominated by the rumors that the Feds will increase the interest rate for an extended period, USD gained momentum.

As the things stand, there is no positive sign for the price of crude oil. As the price of USD increases, this makes commodities cheaper for those who invest in USD.

On the flip side, those investors who are investing in commodities in foreign currencies are finding it hard to cope with the price hike.

Fed officials have clarified that they are likely to remain hawkish regarding monetary policies.  As the result, the U.S. PCE index has plummeted after surging by 0.6%.

Crude is Currently Dominated by Market Sentiment

The global market sentiment is another important factor that is shaping the price of crude oil. If risk defiance continues to mount, crude oil will constantly remain under pressure.

Moreover, the sanctions on the Russian oil supply have created a massive gap in fulfilling the market demand.

As of now, Russian oil exports are dependent on India and China. On the other hand, Europe is looking for supplies from the gulf countries.

Russian officials previously stated that they will cut down its oil products to Western countries. This means Europe can face an energy crisis in case the demand is not fulfilled.

All these economic and geopolitical tensions have made the situation immensely difficult for crude oil and crude oil traders.

Market experts have concluded that the ban imposed by the European Union on Russian oil products contributed greatly to disrupting the price of crude oil.

Moreover, the global crude oil price cap has a very minimal impact on the price of crude oil. As Russia will keep halting its oil exports this will keep putting pressure on U.S. Crude oil.

Hence, oil experts seem convinced that there is no stopping the price of crude oil from going further and further down. Moreover, U.S. oil production is also declining as compared to its oil production a year ago.

Bank of America, at the start of 2023 had said that the price of crude oil can slip below the $88 mark from $100. The only positive for crude oil at the moment is the revival of China’s industrial activities.

Chinese imports can suddenly increase the demand for crude oil. The high demand is the only way oil can see a rise in its price.

But as the things stand, experts have warned investors not to invest in crude oil. The future of crude oil is highly uncertain.

Furthermore, as long as the Feds don’t clarify their interest rate position crude oil is not going to be stable.