Uncertainty in the global financial world also has jostled oil prices around, with events like the U.K. vote to exit the European Union resulting in a rout of so-called risk assets, including oil and global equities.
“The U.S. dollar always has an impact on crude. [Dollar] strength on crude will provide a stiff headwind for crude oil even if fundamentals on crude are strong,” said Tariq Zahir, managing member of commodity-trading firm Tyche Capital Advisors LLC.
“In this instance with U.S. rigs building, Nigerian and Canadian oil all getting back online and supplies at record levels, the U.S. dollar gaining strength is not only providing a headwind but helping crude in its current weakness,” Zahir said.
Crude’s weakness wasn’t helped by data on Wednesday from the U.S. Energy Information Administration that showed crude inventories rose 1.7 million barrels for the week ended July 22, with gasoline supplies up 500,000 barrels, reinforcing the view that high gasoline inventories are dragging crude futures lower, despite a summer period in the U.S., which should pull stockpiles lower.
Coincidentally, the dollar’s influence on oil is one factor Morgan Stanley’s Longson cited back in January as a threat to higher crude prices. Back then, Longson stated that because there is “no intrinsic value” to crude oil in an oversupplied market, oil tends to be vulnerable to currency gyrations.
And continued worries about oversupply seem like exactly the dynamic the crude-oil market is wrestling with again. That may be especially the case as the Federal Reserve opted to leave rates unchanged on Wednesday but hinted that it might be inclined to raise interest rates in September, citing improved economic conditions.
Click Here To Register For Free Trial Services OR Give A Missed Call : +6531581402 Follow Us On Twitter : www.twitter.com/epicresearchsg Like Us On Facebook : www.facebook.com/EpicResearchSingapore Need Any Assistance Feel Free To Mail Us at : info@epicresearch.sg
0 comments:
Post a Comment