Oil prices continued downward on Monday, Feb. 26, building on the previous session's losses.
At the same time, the dollar sharply rose as investors bet that inflation would be more robust than anticipated, delaying the lowering of the high-interest rates in the United States that have been preventing the increase in worldwide gasoline consumption.
Ongoing Decline
As of 6:56 AM GMT, the price of Brent oil futures was $81.48 per barrel, down 14 cents, or 0.2%, and the price of WTI crude futures, for the US, was $76.27 per barrel, down 22 cents, or 0.3%, due to the strengthening of the dollar, as reported by Reuters. Oil becomes more costly for those holding foreign currencies as the dollar increases.
Brent lost nearly 2%, and WTI plummeted over 3% last week, adding to this week's losses, as markets delayed the beginning of US interest rate decreases by two months owing to an increase in inflation.
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Assertions by Experts
Since November 2023, oil prices have fluctuated between $70 and $90 per barrel, with increased US output and worries about poor Chinese demand offsetting supply curbs by the Organization of the Petroleum Exporting Countries (OPEC) and others.
"Oil has been caught between bullish factors such as lower OPEC output and elevated geopolitical risks and bearish concerns about weak demand in China," ANZ analysts pointed out in a statement.
According to a note from Goldman Sachs analysts, the premium for geopolitical risk caused by the assaults on Red Sea ships by the Yemeni Houthis was quite little, adding just $2 per barrel to Brent.
As a result of problems in the Red Sea, which have caused larger-than-expected withdrawals in stockpiles held by the Organisation for Economic Co-operation and Development (OECD) nations, the bank has increased its summer peak price for a barrel from $85 to $87.
Despite lowering its prediction for China and raising it for the US and India, Goldman Sachs still projects a 1.5 million barrels per day (bpd) increase in oil consumption in 2024.
Meanwhile, Qatar plans to increase liquefied natural gas production even though global prices have just dropped significantly, adding to the world's energy supply.
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