Due to concerns about demand and a stronger dollar, oil prices decline this week

25 Aug 2023 , 10:19 AM

Early Friday morning Asian trading saw a modest decrease in oil prices, setting up a weekly decline as sluggish manufacturing growth undermined expectations for global demand and the currency remained strong.

Brent crude had decreased by 16 cents, or 0.2%, to $83.20 per barrel, while U.S. West Texas Intermediate crude had decreased by 18 cents, or 0.2%, to $78.91 per barrel.

For the second straight week, crude oil prices are expected to tumble by 2% to 3%.

After Dutch consultant Insights Global published data showing gasoil stocks kept in independent storage in the Amsterdam-Rotterdam-Antwerp (ARA) refining and storage hub declined by 3% in the most recent week, oil finished slightly higher in the previous session.

The safe-haven dollar experienced its greatest gain in a month as a result of investor nervousness ahead of Federal Reserve Chair Jerome Powell’s statements at the Jackson Hole Symposium. Markets were waiting for information on how long rates would remain high. A strong dollar reduces demand by increasing the cost of oil for holders of other currencies.

While factories around the world reported shrinking activity, oil prices declined for the majority of the week. For the third consecutive month, industry activity in Japan was down in August. Business activity in the eurozone also decreased more than anticipated, and it appeared that the British economy may contract in the current quarter.

Due to high inflation and a slowdown in international trade, India’s oil consumption growth has also slowed recently. Compared to growth of 415,000 barrels per day (bpd) in 2021–2022, the rise in the first seven months was equivalent to around 255,000 barrels per day (bpd).

On the supply side, the market mostly ignored rumours from earlier in the week suggesting that Saudi Arabia would probably continue its 1 million barrels per day output reduction into October.

Despite the fact that U.S. sanctions are still in place, Iran’s oil minister was quoted by state media as stating that the country’s crude oil output will exceed 3.4 million bpd by the end of September.

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