Oil prices slide 2% as dollar firms and central banks hike interest rates (updated)

China Reinsurance (Group)

15/12/2022 05:19

(Adds latest prices, changes dateline to New York, adds analyst
quotes)
    By Scott DiSavino
       NEW YORK, Dec 15 (Reuters) - Oil prices slid about 2% on
Thursday as traders worried about the fuel demand outlook due to
a stronger dollar and further interest rate hikes by global
central banks.
    After rising for three straight days, Brent  LCOc1  futures
fell $1.69, or 2.0%, to $81.01 a barrel by 11:38 a.m. EST (1638
GMT). U.S. West Texas Intermediate (WTI) crude  CLc1  fell
$1.77, or 2.3%, to $75.51.
        "The oil price is under pressure today as the Fed's
hawkish guidance for its monetary policy sparked renewed
concerns about economic growth, lifting the U.S. dollar and
sending commodity prices down," said CMC Markets analyst Tina
Teng.
  
        A stronger U.S. dollar  =USD  makes oil more expensive
for those using other currencies.
        On Wednesday, Federal Reserve Chair Jerome Powell said
the U.S. central bank will raise interest rates further next
year, even as the economy slips toward a possible recession. On
Thursday, the Bank of England and the European Central Bank
raised interest rates to fight inflation.
    In China, the world's second biggest economy, lost more
steam in November as factory output slowed and retail sales
extended declines, the worst readings in six months, hobbled by
surging COVID-19 cases and widespread virus curbs.
        "Disappointing Chinese retail sales and manufacturing
data (was) taking some steam out of recent bullish argument for
China re-opening," analysts at energy consulting firm
Ritterbusch and Associates said.
  
        Also pressuring oil prices, Canada's TC Energy Corp
 TRP.TO  said it was resuming operations in a section of its
Keystone pipeline, a week after a leak of more than 14,000
barrels of oil in Kansas triggered a shutdown.
    "Crude prices edged lower as a section of the Keystone
pipeline restarted and as global recession risks increased after
a wave of central banks delivered another strong round of
tightening," aid Edward Moya, senior market analyst at data and
analytics firm OANDA.
        Technical analysts said the market expects oil prices to
be higher in the future, which could prompt energy firms to take
the bearish step of moving more oil to storage so long as the
higher future price covers the cost of storing that fuel. 
  
        Brent futures remained in contango for March  LCOH3  and
WTI was in contango for February  CLG3  and March  CLH3 . The
current front-month is February for Brent and January for WTI.
  
        U.S. crude oil stockpiles rose by more than 10 million
barrels last week, the most since March 2021, the Energy
Information Administration said.  EIA/S 
 (Additional reporting by Noah Browning in London, Jeslyn Lerh
in Singapore and Laura Sanicola in Washington; Editing by David
Goodman, Sherry Jacob-Phillips and David Gregorio)
 ((scott.disavino@thomsonreuters.com; +1 332 219 1922; Reuters
Messaging: scott.disavino.thomsonreuters.com@reuters.net))