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Crude Oil Prices Fall for Second Session on Stronger Dollar and Rate Worries

24 Jun 2024 8:36 am
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Mumbai, 24 Jun (Commoditiescontrol): Crude oil prices declined in early Asian trade on Monday for a second consecutive session, pressured by a stronger dollar and renewed concerns over prolonged high interest rates that dampened investor risk appetite. Brent crude futures dropped 40 cents, or 0.5%, to $84.84 per barrel, following a 0.6% decline on Friday. Similarly, U.S. West Texas Intermediate crude futures fell 39 cents, or 0.5%, to $80.34 per barrel.

A stronger U.S. dollar makes dollar-denominated commodities like crude oil less attractive for holders of other currencies. Despite the recent drop, both benchmark crude contracts gained approximately 3% last week, buoyed by signs of stronger oil product demand in the United States, the world's largest consumer, and by OPEC+ production cuts that kept supply in check.

U.S. crude inventories decreased while gasoline demand rose for the seventh consecutive week, and jet fuel consumption has returned to 2019 levels, according to ANZ analysts. Geopolitical risks in the Middle East due to the Gaza crisis and increased Ukrainian drone attacks on Russian refineries also supported oil prices.

In Ecuador, the state oil company Petroecuador declared force majeure on Napo heavy crude deliveries for export after heavy rains led to the shutdown of a key pipeline and oil wells. In the U.S., the number of operating oil rigs fell by three to 485 last week, marking the lowest count since January 2022, according to Baker Hughes' Friday report.

Overall, while the stronger dollar and interest rate concerns weigh on oil prices, supply constraints and geopolitical risks continue to offer some support in the volatile market.

(By Commoditiescontrol Bureau: 09820130172)

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