Oil Slips as Dollar Pressure Overshadows Supply Worries, For Now

By Bloomberg

Apr 10, 2023

image is BloomburgMedia_RSU5ULDWX2PS01_10-04-2023_20-00-12_638166816000000000.jpg

An oil drilling rig in Midland, Texas, US, on Thursday, March 2, 2023. Thousands of miles away from the turmoil on Wall Street, Midland, Texas that ranked No.1 in the US for inflation just over a year ago has since ceded that title – only to lay claim to a different one: the country’s pay-raise capital.

(Bloomberg) -- Oil fell in a low-volume session, unable to withstand a rising US dollar while investors waited for upcoming supply constraints to hit the market.

Traders exited risk assets Monday, pausing a rally in which prices have risen roughly 20% in the last three weeks. OPEC+’s surprise decision to slash output beginning in May reignited bullish bets on prices, yet some demand indicators are flashing signs of weakness.

“The US dollar rally is triggering a slight correction in crude,” said Dennis Kissler, senior vice president of trading at BOK Financial Securities. “Inflation still hanging around should cause further rates hikes by the Fed, which is bullish to the US dollar and a negative near term to crude.”

Traders are awaiting insights this week into monthly outlooks from OPEC and the International Energy Agency as well as US inflation data and Federal Reserve minutes.

Separately, Turkey wants to negotiate payments it owes Iraq before a pipeline that exports 400,000 barrels a day is reopened, according to Turkish officials familiar with the situation.

Russia’s Energy Ministry, meanwhile, said that the nation reduced its oil output by about 700,000 barrels a day last month, according to a person familiar with the data. Nevertheless, that figure is inconsistent with indicators on the nation’s March seaborne exports and supplies to domestic refineries.

By Julia Fanzeres , Sri Taylor