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Oil Prices Under Pressure From A Strong Dollar

Oil Prices

U.S. West Texas Intermediate crude oil futures are edging lower on Friday, putting the market in a position to finish the week with a loss. The usual supply and demand factors may have taken a back seat this week to the U.S. Dollar, which continued to firm on expectations that the U.S. Federal Reserve will speed up the pace of its interest rate hikes in an effort to tame inflation.

Crude oil bulls are also grappling with the possibility the Biden administration might release oil from the U.S. Strategic Petroleum Reserve to cool prices. Meanwhile, a new forecast from OPEC that showed world oil demand for the fourth quarter could also drop is raising additional concerns.

Dollar Climbs as US Inflation Surge Fuels Rate Hike Speculation, Dampening Foreign Demand for Crude

The government reported on Wednesday that consumer inflation (CPI) surged at its fastest rate in 30 years. The news fueled a wave of fear in the market on the thought that both the White House and the U.S. Federal Reserve may take action to stem the rise in prices.

The news also drove Treasury yields sharply higher, pulling up the U.S. Dollar. The strong dollar weighed on crude oil on the notion it would drive down foreign demand for the dollar-denominated commodity.

More Supply May Be Coming

Also weighing on prices was speculation the Biden Administration would tap the strategic reserve for crude oil and gasoline in an effort to drive down prices for consumers ahead of winter.…

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