The overall price of crude oil across markets was down today, but, fret not, the hemorrhaging was halted by a sharp decline in oil’s actual stockpiles in the U.S. Much of this precipitous decline was incited by the rise of the U.S. dollar.
Brent crude oil futures fell to $73.65 a barrel by 0103 GMT, which is around 1%, and this came after a drastic uptick yesterday, which surprised many investors, MetaNews reported.
Meanwhile, we saw a decline in U.S. crude oil futures as well. They were down to $71.46 a barrel, which came after another untouchable high in trade yesterday.
The energy market investors and movers had apparently banked so heavily on there being a resurgence in travel spending (which would obviously cause a huge draw for oil) that this drop-off seems to have taken many by complete surprise.
It’s strange that everyone really expected the central bank to more-or-less crush certain hopes of titration, because what ended up happening was the opposite. They’ve essentially encouraged us to start expecting increases to the dollar. Not meteoric increases, mind you, but they’ve made it clear that they’re ready to start the process.
This is given some weight by the fact that, afterward, the USD hit its biggest limit since fifteen months ago.
Though, a stronger dollar does mean that other resources that are metered against the dollar, such as oil, will be harder to purchase, and this in turn might trigger a lot of demand slow-downs.
Even so, we saw that crude oil decline was capped by, ironically, U.S. supply woes.
This cap was reinforced by an uptick in Chinese demand for oil. Considering China is the second largest global consumer of the black stuff, that’s not exactly comforting. The overall price of crude oil across markets was down today, but we have reason to think it will happen again as the dollar’s strength increases.