Crude oil slips in early trade

13 Mar 2023 , 08:53 AM

Although a resurgence in Chinese demand and a weaker dollar offered some support, oil prices fell in Monday’s Asian morning session as worries about potential future interest rate hikes in the United States continued to frighten investors.

Brent crude futures were down 15 cents, or -0.18%, to $82.63 per barrel. WTI crude futures (West Texas Intermediate) fell by 9 cents, or -0.12%, to $76.59 per barrel.

Oil prices were supported by a depreciating dollar, which makes oil less expensive for holders of other currencies.

There has been downward pressure on the dollar as a result of the failure of Silicon Valley Bank and New York-based Signature Bank as well as worries about probable contagion. On Monday morning, Asian trading saw a 0.2% decline in the dollar index.

Amin Nasser, the CEO of Saudi Aramco, made some supportive remarks regarding Chinese demand for crude oil on Sunday.

We are talking about 2 million barrels if you take into account China opening up, an increase in jet fuel demand, and very little spare capacity, so as I said, we are cautiously hopeful in the short- to mid-term and the market will remain tightly balanced.

The remarks follow the disclosure that Riyadh and Tehran had agreed to normalise their diplomatic relations in a deal mediated by China, potentially opening the door to the restoration of a nuclear agreement that would permit the sale of Iranian crude that is presently prohibited.

The sluggish start to the week for oil indicates a slowing of the upward trend that began on Friday after positive surprises in the U.S. jobs figures. According to a Reuters survey, the nonfarm payrolls increased by 311,000 in February, exceeding estimates of 205,000 new positions.

For the first time since July 2020, U.S. energy companies this week reduced the number of active oil and natural gas rigs for a fourth week in a row, according to energy services company Baker Hughes Co.

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