Oil prices are declining

Oil prices are moderately lower on Friday morning after the publication of US inflation data triggered a rise in the dollar.

US inflation in January accelerated to a 40-year record of 7.5% and triggered a rise in expectations of stronger monetary tightening by the Federal Reserve. That, in turn, “sent the dollar higher, which sent commodity prices tumbling,” said OANDA analyst Edward Moya.

The rising value of the dollar makes it more expensive for traders using other currencies to buy oil.

Meanwhile, some support for the market is still provided by the data, which showed an unexpected drop in oil inventories by 4.76 million barrels in the U.S. last week. At the same time, volumes at the Cushing terminal, where NYMEX-traded crude is stored, fell by 2.8 million barrels.

“The market is confused by the strong inventory data and, at the same time, indicators that the Fed is likely to raise rates in 2022 faster than previously expected,” United ICAP analyst Scott Shelton wrote.

Still, market conditions “remain dire and with no change in the outlook, oil prices will continue to rise,” Moya added. On Thursday, OPEC published an updated estimate of oil demand in 2022, according to which consumption is expected to grow by 4.15 million bpd to 100.8 million bpd.

At the same time, the experts maintained the demand estimate for the first and second quarters of 2022 – 99.13 and 99.75 million bpd, respectively, but raised the forecast for the third and fourth quarters by 30 and 20 thousand bpd – to 101.32 and 102.92 million bpd, respectively.

The cost of April futures for Brent on the London-based ICE Futures exchange by 8:36 Moscow time on Friday is $90.80 per barrel, down $0.61 (0.67%) from the previous session’s closing level. At the end of trading on Thursday, these contracts fell in price by $0.14 (0.15%) to $91.41 per barrel.

The price of WTI futures for March at the electronic trading of the New York Mercantile Exchange (NYMEX) by this time decreased by $0.41 (0.46%) – to $89.47 per barrel. The day before, the cost of these contracts rose by $0.22 (0.25%), to $89.88 per barrel.


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