A stronger dollar and caution ahead of the Fed minutes cause Brent oil to decline

21 Feb 2023 , 08:31 AM

As optimism over demand amid tightened supplies drove prices higher on Monday, the benchmark Brent oil price began marginally lower on Tuesday as the U.S. currency rose and traders awaited clues from the U.S. Federal Reserve meeting minutes.

Tuesday’s price for Brent crude was $83.57 a barrel, down 59 cents or 0.5%. WTI (West Texas Intermediate) for the United States, which expires on Tuesday, was up 78 cents or 1.02% at $77.12.

Due to a United States holiday, WTI futures did not settle on Monday. The most active contract at the moment is WTI April, which was up 52 cents or 0.68% to $77.07.

As recent figures on core inflation have increased the likelihood that interest rates will stay higher for longer, traders are eagerly awaiting the minutes of the most recent Federal Reserve meeting, which are coming on Wednesday.

All eyes are now on the monetary policy in the largest economy and greatest oil consumer in the world, China, as its oil imports are expected to reach a record high in 2023 and India’s demand, the third-largest oil importer in the world, is increasing amid tightening supplies.

Despite near-term obstacles like U.S. interest rate hikes, analysts predict that oil prices will climb in the next weeks due to a shortage and a recovery in demand.

With the imposition of price ceilings on Russian oil and oil products by the West, Russia expects to reduce its oil production in March by 500,000 barrels per day (bpd), or around 5% of its total output.

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