Oil prices extend losses on stronger dollar, weaker demand

April 20, 2023 (MLN): Oil prices continued the downward journey on Thursday owing to a stronger U.S. dollar and the Fed’s recent hawkish stance during the week.

Economic data from the U.S. and China released earlier also has not provided hope to investors for an improvement in demand.

Brent crude is currently being traded at $81.91 per barrel, down 0.77%. U.S. West Texas Intermediate (WTI) at $78.29 per barrel, down 0.89%, both benchmarks marking a 2-day losing streak.

Both benchmarks continued to drop after Wednesday's sharp decline of 2%. They have fallen by around 5% this week. This decline brings them to their lowest point since OPEC+ announced a surprise production cut on April 2.

Edward Moya, a senior market analyst at OANDA, stated that oil prices could continue drifting lower if the U.S. dollar keeps strengthening, as reported by Reuters. WTI has already dropped below $80 per barrel, he added.

The U.S. dollar index (DXY) has strengthened by around 0.33% during this week alone. This makes oil expensive for other currencies.

U.S. Energy Information Administration (EIA) data showed crude oil stockpiles in the U.S. fell by 4.6 million barrels last week, as refinery runs and exports increased. While gasoline inventories surged unexpectedly due to weak demand.

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