Oil prices fall amid strong US dollar, economic concerns

Oil prices fall amid strong US dollar, economic concerns
-A +A

(Sept 29): Oil prices fell in early Asian trade on Thursday (Sept 29) as a strong US dollar and economic woes outweighed optimism over consumer demand.

Brent crude futures fell 59 cents, or 0.7%, to US$88.73 per barrel by 0016 GMT while US crude futures fell by 54 cents, or 0.7%, to US$81.59. Both benchmarks rebounded in the prior two sessions amid volatile trade after reaching nine-month lows this week.

The US dollar trended upward on Thursday morning, after hitting a fresh two-decade peak against a basket of currencies on Wednesday before pulling back. A strong US dollar reduces demand for oil by making it more expensive for buyers using other currencies.

The Bank of England said it is committed to buying as many long-dated government bonds, known as gilts, as needed between Wednesday and Oct 14 to stabilise its currency after the British government's budgetary plans announced last week caused the sterling to tumble.

As markets tried to digest what the move meant for the pound, the currency whipsawed during Wednesday's session, jumping as high as US$1.09165 and falling as low as US$1.05390. It was last up 1.51% at US$1.08921.

Goldman Sachs cut its 2023 oil price forecast on Tuesday, due to expectations of weaker demand and a stronger US dollar but said global supply disappointments only reinforced its long-term bullish outlook.