(Bloomberg) — Oil fell as a surging US dollar weighed on commodities, and concerns about demand growth tarnished the outlook for prices.
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Global benchmark Brent dropped toward $72 a barrel, while West Texas Intermediate was near $68. The US currency has rallied to the highest level in two years in the aftermath of Donald Trump’s election win. That makes raw materials priced in the greenback more costly for most buyers, and crude’s drop came alongside losses in other commodities including copper.
China’s weakening profile in the global oil market remains a concern, with the US Energy Information Administration saying midweek that India was now the leading source of demand growth in Asia as Chinese consumption falters due to its slowdown and electric-vehicle penetration. Further analysis will come later Thursday from the International Energy Agency.
Crude has alternated between weekly gains and losses since mid-October, with traders weighing OPEC+ supply moves, US monetary policy, and the risks to oil-demand growth, especially in China. There’s widespread concern that the global market will flip to a glut next year, with Morgan Stanley trimming its price forecasts this week citing the softening outlook.
“Even as Fed rate-cut bets rise, US economic resilience keeps the dollar strong, weighing on oil,” said Charu Chanana, chief investment strategist at Saxo Capital Markets Pte in Singapore. Demand concerns remain after OPEC revised its growth forecast lower, and as traders digest what the upcoming Trump presidency could mean for China’s outlook, she said.
The Middle East was also in focus. Israel was rushing to prepare a cease-fire deal on Lebanon as the government adjusted to the prospect of Trump’s White House return, according to a Washington Post report.
In the US, the American Petroleum Institute reported US crude inventories fell 800,000 barrels last week, with levels at the Cushing, Oklahoma, hub shrinking by a larger 1.9 million barrels, according to a document seen by Bloomberg.
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