Oil prices remained relatively stable in Asian trade due to a stronger dollar and anticipation of the Federal Reserve Chairman’s speech on U.S. monetary policy. While prices had some stability, concerns over slowing Chinese demand and increased U.S. supply weighed on the market. The sluggishness in oil prices has persisted for two consecutive weeks, with a potential decline of 1.9% to 3%.
The strength of the dollar had a negative impact on oil markets as traders awaited Jerome Powell’s speech from the Federal Reserve. This anticipation, coupled with the U.S. job market’s strength and sticky inflation, led to fears of potentially hawkish signals. The resulting surge in the dollar made crude more expensive for international buyers, which exerted downward pressure on oil prices. The expectation of higher interest rates also raised concerns about a slowdown in economic activity, potentially reducing demand for crude.
Although there was some relief in oil prices on Thursday, they were still on track for a second consecutive week of losses, indicating a possible end to the recent rally. Slowing Chinese demand, as evidenced by the smaller-than-expected interest rate cut by the People’s Bank of China, added to market pressure. Furthermore, signs of weakening U.S. fuel demand, along with unexpected buildups in crude and gasoline stockpiles, contributed to the downward trend. However, oil prices remained slightly higher for the year due to significant supply cuts by Saudi Arabia and Russia.