Oil fell by almost $2 per barrel, affected by the growth of the US currency and concerns about further tightening of the Fed's monetary policy, which could negatively affect oil demand. Meanwhile, since the beginning of the week, prices have fallen by about 4%.
The US Dollar Currency Index (DXY), which tracks the dynamics of the dollar against six currencies (euro, swiss franc, yen, canadian dollar, pound sterling and swedish krona) rose by 0.6% to 104.48, reaching the highest level since January 6.
The president of the Federal Reserve Bank of Cleveland, Loretta Mester, said yesterday that she still believes that the Fed needs to raise the rate to more than 5% and keep it above this mark for some time to bring inflation back under control. The St. Louis Fed President James Bullard said that the Fed, in his opinion, should increase the rate to 5.25-5.5%, and do it "as soon as possible." Thus, Bullard considers it necessary to raise the rate by 75 bps from the current level. "A further rate hike could help consolidate the disinflationary trend in 2023, even with continued economic growth and a strong labor market," Bullard said.
Pressure on oil prices was also exerted by signs of sufficient supply. Russian media reported that national oil producers expect to maintain the current volume of crude oil exports, despite the government's plan to reduce oil production in March.
Meanwhile, US oil inventories rose sharply last week and reached the highest level since June 2021.