Oil prices are down again Wednesday morning in Asia, driven by a recovery in the dollar which pulled down fuel demand.
Crude Oil WTI Futures futures for April delivery were trading at $61.33 a barrel mid-morning in Asia, down 0.74%. Brent crude futures for April delivery, traded in London, were down 0.31% at $64.84 per barrel in mid-morning.
Traders said the declines were due to U.S. dollar-denominated oil imports being more expensive for other countries. The dollar rebounded from three-year lows set last week as traders cut back on some of the bearish bets against the U.S. dollar.
A continued dollar recovery will work against oil prices, but oil markets remain well supported due to a healthy demand-growth in Asia, particularly China, combined with a supply restraint by the Organization of the Petroleum Exporting Countries (OPEC).
Saudi Arabia’s effort to clean up the global oversupply of oil is also helping to stabilize oil price volatility. The Kingdom has vowed to reduce its exports to below 7 million barrels per day (bpd) next month and to cut oil production by 100,000 bpd in March compared to the February level.
Further supporting prices are rising tensions in the Middle East, especially along the border of Syria and Israel. While neither Syria nor Israel is a major player in the oil business, threat to oil anywhere in the Middle East tends to put upward pressure on oil prices.
These mixed signals have caused oil prices to zigzag up and down over the past weeks, mostly between small rises and dips. That said, current prices have moved quite far from the highs of the beginning of February. WTI started February at $65.80 and Brent started at $69.65.
The U.S., now the second-largest producer of oil in the world, continues to increase its oil production, further dragging prices down. The U.S. has increased its production by more than 20% since mid-2016 to more than 10 million bpd.
Report courtesy Investment.com