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Saturday, May 21, 2022
Alternative Investments

Oil prices dip as dollar soars

Oil prices

Brent crude futures dipped 54 cents, or 0.5%, to $104.45 a barrel and U.S. West Texas Intermediate crude futures dropped 79 cents, or 0.8%, to $100.91 a barrel

Oil prices dipped on Wednesday as a soaring dollar made barrels more expensive and Europe’s biggest economy Germany was speeding up plans to wean itself off Russian oil while coronavirus outbreaks clouded China’s economic outlook.

Erasing earlier gains, Brent crude futures dipped 54 cents, or 0.5%, to $104.45 a barrel by 1259 GMT. U.S. West Texas Intermediate crude futures dropped 79 cents, or 0.8%, to $100.91 a barrel.

Russian energy giant Gazprom said on Wednesday it halted gas supplies to Bulgaria and Poland in a major escalation of Russia’s broader row with the West over Ukraine.

European Commission President Ursula von der Leyen said Russia was using fossil fuels to blackmail the EU but added the era of Russian fossil fuels in Europe was coming to an end.

Germany is pushing ahead with attempts to become independent of Russian oil imports. German economy minister said plans to for Germany to take control of the PCK Schwedt refinery, majority-owned by Rosneft and the last big German buyer of Russian crude, were progressing.

U.S. government data on oil inventories is due later on Wednesday. Industry data on Tuesday showed U.S. crude and distillate stocks rose last week, while gasoline inventories fell.

Also capping oil price gains, the dollar rose to its highest in five years on Wednesday, making oil purchases more expensive for holders of other currencies.

A U.S. crude build last week and still solid Russian crude exports is limiting the upside for crude, said UBS commodity analyst Giovanni Stauvono.

Stauvono said: This is a risk off environment with a stronger U.S. dollar and mobility restrictions in the second largest oil consumer, China.

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