Crude Oil Prices Rise Despite a Strong U.S Dollar

 Crude Oil Prices Rise Despite a Strong U.S Dollar

Crude Oil Prices Rise Despite a Strong U.S Dollar.

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As the market grappled with a stronger dollar and concerns about rising U.S. inflation, oil prices ended slightly higher on Thursday. OPEC also cut its 2021 oil demand forecast due to high prices.

After falling to $81.7 a barrel during the session, Brent crude futures settled near $83 a barrel. U.S. West Texas Intermediate (WTI) futures gained 25 cents to $81.5 per barrel, rebounding off the session low to $80.2.

Toward the end of the session, energy prices rose on expectations that post-pandemic demand will continue to increase.

OPEC predicts that higher energy prices may dampen the rate at which demand returns. Oil demand for the fourth quarter of 2021 is expected to average 99.49 million barrels per day (bpd), down 330,000 barrels per day from last month’s forecast.

Due to elevated energy prices, OPEC expects a slower recovery in the fourth quarter of 2021. It also cited slow demand in China and India.

Consumer price inflation rose at the fastest pace in 30 years in October, U.S. data showed Wednesday, mostly driven by rising energy costs. Brent and WTI crude crude fell by 2.5% and 3.3%, respectively, as the dollar rose on expectations that U.S. rates would rise.

Bets on interest rate hikes caused the dollar to reach almost 16-month highs against the euro and other currencies on Thursday.

The Organization of Petroleum Exporting Countries (OPEC) anticipates that world consumption will exceed 100 million barrels per day in the third quarter of 2022, three months later than forecast last month. In response to calls for more crude from the United States, the producer group cites the uncertain path for demand as the primary reason for not increasing supply.

On Oct. 25, Brent crude hit a three-year high of $86.7 a barrel, a gain of more than 60% this year. Nevertheless, oil prices seem to be consolidating below $85 a barrel. The U.S. shale and petro-nation supply are likely to pick up gradually going forward, which could lead to the beginnings of an easing market.

Olumide Adesina

Olumide Adesina a France-born Nigerian, a Certified Investment Trader, with more than a decade of working expertise in Investment and Trading. He is also a reputable author and writer for CoinDesk and FxEmpire.

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