On Tuesday, both US WTI (West Texas Intermediate) and UK crude oil prices fell over 2.0 per cent in context of a sharp rise in American Dollar Index (DXY). If truth is to be spoken, traders appeared to have momentarily overlooked a landscape that the OPEC (Organization of Petroleum Exporting Countries) alongside its Russia-backed allies had continued to ignore Biden Administration’s call to pump more amid an energy stand-off between Kremlin and EU.
A document from OPEC had unveiled that the group of petroleum exporting countries’ output had fallen 3.58 million bpd (barrels per day) short of its target last month, around a 3.5 per cent of entire global oil demand.
On top of that, a sharp rise in US Dollar Index (DXY) alongside US Treasury bond notes amid growing risks of a recession alongside a likely 100 bps (basis percentage point) rate-hike from the US Fed as early as this Wednesday, had prompted market participants to stay cautious despite a decline in influx of crude oil into commodity markets across the globe.
In point of fact, a stronger US Dollar is usually viewed as a negative fundamental for crude oil futures’ prices.
Crude oil tread water ahead of Fed rate decision
Citing statistics, as of Tuesday’s late-afternoon European trading hours, US WTI crude oil futures’ prices plummeted as much as 2.19 per cent to $83.44 per barrel.
Besides, UK crude oil futures’ prices were last trading 1.94 per cent lower to $89.20 a barrel. If truth is to be spoken, traders are betting heavily on a 100-bps rate-hike from the US Fed at its September policy meet following last week’s CPI (Consumer Prices Index) and PPI (Producers Prices Index) data underscoring US inflation soared unexpectedly in August, while an increase in US PPI (Producers Price Index) had highlighted a growing likelihood of further climb in US inflation over coming months, eventually adding to a bullish wing to greenback while keeping commodity traders at their toes.