Oil falls in volatile trading on demand concerns, supply disruptions
The ebb and flow in investor sentiment about the supply-demand dynamics of global crude pushed futures down more than 1 percent on Tuesday; with the intensification of the war between Russia and Ukraine, the supply involves limited losses.
The international benchmark, Brent oil, fell 1.2 percent to $111.75 a barrel, after rising more than $1 to $114.21 earlier in the session. U.S. crude fell 1.5% to $106.57 a barrel, after previously rising to $108.92.
Both contracts were up more than 1 percent on Monday and oil prices hit their highest point since March 28.
But demand for oil likely declined on the back of the dollar’s strong rally, which rose to a new two-year high. Indeed, the dollar index crossed 101 on Tuesday.
A stronger dollar makes commodities priced in dollars more expensive to the currency holders quoted on the opposite side of the exchange rate, dampening demand.
What hasn’t helped are the strict COVID-19 restrictions China has put in place to contain the spread, even as the country has started opening its factories after shutting down for nearly three weeks.
Traders will want to monitor the stock data expected this week and be wary of the loss of supply from the Libyan oil fields.
The war between Russia and Ukraine has likely limited crude oil losses as prospects for more sanctions against Moscow have increased.
