Crude markets sink on dollar pressure

Oil prices fell to the lowest in about three weeks on Thursday, depressed by a firmer dollar and rate hike expectations, which outweighed lower US crude stocks.

Brent crude futures were down $1.12, or 1.4%, at $82 a barrel at 8.19am GMT. West Texas Intermediate dropped $1.02, or 1.3%, to $78.14.

Following Wednesday’s 2% decline both benchmarks are at their lowest since late March, just before a surprise Opec+ production cut announcement, though not all gains from that move have been erased yet.

The US dollar index has gained about 0.3% since Monday, putting it on course for the strongest week since late February. A strengthening greenback makes oil more expensive for holders of other currencies.

US economic activity was little changed in recent weeks, according to a Federal Reserve report.

Fed policymakers have signalled they are nearing the end of what has been the most aggressive spate of policy tightening in 40 years, with most of them indicating one more 25 basis-point hike.

On the other side of the Atlantic, persistent double-digit inflation in Britain has bolstered expectations of a further Bank of England rate hike.

US crude stockpiles fell by 4.6-million barrels as refinery runs and exports rose, while petroleum inventories jumped unexpectedly on disappointing demand, according to the US Energy Information Administration (EIA).

The crude stockpile decline was far steeper than analysts’ estimates that of the American Petroleum Institute.

On the supply side, oil loading from Russia’s western ports in April is likely to rise to the highest since 2019, despite Moscow’s pledge to cut output, trading and shipping sources said.

Pakistan has placed its first order for discounted Russian crude under a new deal that could cover 100,000 barrels a day, the country’s petroleum minister said. 

Reuters