Oil dips as dollar firms while more rate hikes loom
Oil prices dipped in Asian trade on Thursday as the dollar firmed, while the possibility of further interest rate hikes from global central banks also heightened demand concerns.
Brent crude futures fell 64 cents, or 0.8 per cent, to $82.06 per barrel by 0430 GMT, while US crude futures slid 74 cents, or 1.0 per cent, to $76.54.
Both contracts fell as the dollar gained. A stronger dollar weakens oil demand as it makes the commodity more expensive for those holding other currencies.
Federal Reserve Chair Jerome Powell said on Wednesday the US central bank will raise interest rates further next year, even as the economy slips towards a possible recession.
"Oil price is under pressure today as the Fed's hawkish guidance for its monetary policy sparked renewed concerns about economic growth again, lifting the US dollar and sending commodity prices down," said Tina Teng, an analyst at CMC Markets.
The world's second-biggest economy lost more steam as factory output slowed and retail sales extended declines, both missing forecasts and clocking their worst readings in six months amid surging COVID-19 cases.
Also weighing on 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 triggered the whole pipe's shutdown.
Price declines were capped by projections from the International Energy Agency, which see Chinese oil demand recovering next year after a contraction this year of 400,000 barrels per day.
Meanwhile, US crude oil stockpiles rose by more than 10 million barrels last week, the most since March 2021, the Energy Information Administration (EIA) said.
US gasoline stocks rose by 4.5 million barrels in the week to 223.6 million barrels, while distillate stockpiles rose by 1.4 million barrels to 120.2 million barrels.
"Commercial crude oil inventories rose as refineries trimmed their runs," said Citi analysts in a note.
Refined product inventories also rose robustly as end-user demand continues to taper off in light of high energy prices and net exports of refined products rose, the analysts wrote.